Forex Trading News August 2009

The Kiwi Dollar fell against the US Dollar and the Japanese Yen as a result of decreasing demand for higher-return investments while investors evade risky trading options such as New Zealand assets. The governor of the Reserve Bank of New Zealand, New Zealand’s central bank, fears the strength of the Kiwi.

Poland’s Zloty continued its rise while the nation’s economy demonstrates one of the fastest recuperations regionally, raising the demand for the Polish currency in the region. The Mexican Peso fell versus the Greenback for the fifth consecutive day at the end of this week’s trading session as it declined more than 3% on the back of suggestions that the central bank may alter the day by day US Dollar auctions.

Russia’s Rouble rose against the US Dollar for the first time since three days due to rising crude oil prices as a result of presumptions that demand will increase. This indicates that Russia, one of the most important crude oil suppliers, will raise the export of the country’s commodity goods.

The Swedish jobless rate rose in July in comparison with the same period in 2008, reported Statistics Sweden (Statistiska Centralbyrån (SCB)) today. The Japanese Yen continued to rise on the back of speculations that Japanese investors are repatriating foreign assets to the nation in order to benefit from a new tax regulation, boosting the Japanese currency to continue its rise while the circumstances are rather negative.

The common European currency started this week’s trading session rather weak, while it climbed today due to business sentiment in Germany improving again, indicating that the Eurozone nations are leaving the economic slump behind. The Sterling continues to decline as the economic situation in Great Britain remains critical.

Stanley Fischer is the first governor of the Israeli central bank to increase the lending rates that could result in an appreciation of the national currency, which could hamper a revival of Israel’s economy. Surprisingly, the central bank’s governor raised the interest rates by 0.25% to 0.75%. The Israeli New Shekel posted a third day of gaining, reaching 3.7917 at 10:06 a.m. in Tel Aviv-Yafo.

The Hungarian currency started this week’s trading session with a decline from the strongest level in nearly 10 days. The central bank´s meeting of today is expected to result in a reduction in the national base interest rate to a historical low after the socialist epoch. The Magyar Nemzeti Bank, Hungary's central bank, will announce its interest rate decision this Monday at 12:00 a.m., as economists forecast a rate cut to a record low of 8% in comparison with the current level of 8.5%, which is the strongest level in the EU together with Romania.

The Brazilian currency, which posts the best results among the emerging currencies, gained this Friday on the back of optimistic Purchasing Managers Index (PMI) figures, prompting traders to seek higher-yielding investments betting on the fact that the economic improvement has yet begun. The Loonie continued to rise today, while the Yen declined towards the end of this week’s trading session.

The statistics bureau of the Republic of China (Taiwan) increased its outlook for the nation’s gross domestic product, while the worldwide economy seems to improve. The statistics bureau stated that rebuilding spending after the worst typhoon in half a century could contribute to Taiwan’s economic recovery.

The Greenback was stable against other important currencies this Thursday morning in New York, recovering after tapping a record low against the Pound. Equities in South Korea and China rose, on which the Japanese Yen dropped at the start of this Thursday’s trading session in Asia. This resulted in some confidence that prompted investors to seek higher-return investments, decreasing the attractiveness of the Yen.

Malaysia’s consumer prices declined for the second consecutive month in July due to moderated commodity costs in comparison with the historical levels of last year, which allowed the central bank to maintain the low interest rates in order to boost an economic improvement. The Malaysia Statistics Department reported that consumer prices fell 2.4% in comparison with last year, while they dropped 1.4% in June. In the Asian region, with countries such as Hong Kong, Singapore and China, consumer prices declined due to the worldwide slump affecting demand negatively, on which commodity costs moderated versus the record high levels of 2008.

Confidence among German investors most likely increased to a three-year record high in August as Germany’s economy left the slump behind in the second quarter, according to an investigation of economists. It remains insecure if the German recovery will be sustainable when the stimulus programs expire.

The Japanese Yen continues its rally against the most-traded currencies due to various global and internal events that increase the attractiveness of safe-haven currencies, striking mostly European currencies today. The demand for refuge currencies such as the Yen was also boosted by the Japanese GDP figures, which were below par.

In the second quarter, the Spanish economy shrank more than estimated, which indicates that Spain’s economy, Europe’s former motor of economic expansion, has not followed the French and German example. Spain has also become less competitive regarding labor costs in comparison with other European nations.

This Friday, the UniCredit Bank Austria AG announced that its business gauge indicates a durable recovery in the business segment, while expectations that Austria’s economy may stabilize are rising. The Bank Austria’s business gauge climbed 1.8 last month in comparison with June’s 2.1. Stefan Bruckbauer, an economist at Bank Austria, commented: “We consider the renewed quarterly decrease in GDP of 0.4% in the second quarter as an indication that the downturn is bottoming out.” Bruckbauer expects the Austrian economy to grow 0.3% in the third quarter, while Bank Austria estimates a continuous contraction of 3.5% in 2009.

The Polish currency gained against the Single Currency as the German economy, Poland’s main trading partner, showed unexpected growth in the second quarter. Poland’s Zloty posted the second-best results of the 25 emerging currencies, rising 1.2% to 4.1090 a Euro. It traded at 4.1144 versus the Euro at 1:06 p.m. in Poland’s capital.

The Colombian Peso rose as a result of investors speculating that American Federal Reserve policy makers could announce that economic growth will return earlier than estimated. Colombia’s Peso climbed 1.3%, reaching 2,019.4 per US Dollar at 12:06 p.m. in New York, in comparison with yesterday’s 2,045.28.

The Euro gained versus the US Dollar on the back of rising equities in Europe, boosting higher-return investments such as the Single Currency. The European common currency posted five days of losses versus the US Dollar and reached an one month record high against the Pound Sterling. The Dow Jones EURO STOXX 50, an equity index of Eurozone equities rose 0.6%, 40 of the 50 components went up, while the S&P 500 futures also gained. Korea’s national currency dropped versus the 16 most-popular currencies as its central bank commented that it will proceed an ‘accommodative’ policy stance.

The Pound Sterling continues its rally versus the US Dollar and Euro on the back of increasing services industry and due to the UK manufacturing rising more than expected in July, on which the Sterling reached a nine-month record high. The Brazilian Real dropped for the first time in more than a week as an US report showed that service industries decreased faster in the previous month, while fears concerning the worldwide economy have a negative impact on emerging currencies. Mexico’s Peso reached the highest level in two months as a result of Moody's Corporation stating that the nation’s prospects for investments are solid, eliminating speculations that Mexico would experience a downgrade for the first time since 1995.

The Peruvian Nuevo Sol climbed to the highest level in nearly 12 months as an US report demonstrated that the unemployment rate fell surprisingly, which had a positive effect on the attractiveness of emerging market investments. Chile’s national currency continues to depreciate, while the Bolívar Fuerte, Venezuela’s new currency, went up.

The Institute for Supply Management (ISM) published a report today, which demonstrated that the industrial sector continues to shrink in July, while it also proved that production and new orders progressed considerably. The index of manufacturing activity by the Institute for Supply Management climbed to 48.9 in July from June’s 44.8, despite the fact that every value below 50 suggests a contraction. Economists projected a weaker rise of 46.5.

The Brazilian Real went up today, posting its fifth monthly gain due to increasing prices of commodities which spurred the nation’s trade surplus and attracted overseas investors to the fifth largest country in the world. Brazil’s currency rose 4.7% in July, which is the fourth best result versus the US Dollar among the 16 most-popular currencies, following the Loonie (Canadian dollar), the Swedish Krona and the Norwegian Krone.

For the second day the Greenback is dropping versus the Euro today as a result of traders speculating on a decreasing American gross domestic product (GDP) for the second quarter of this year. The US Dollar is also loosing versus the Pound Sterling, reaching levels close to the lowest of this month, on the back of optimism caused by the GDP, which obliges investors to obtain high-return investments around the globe.