Manufacturing Report Keeps U.S. Dollar Under Pressure

The U.S. dollar started another week with optimism weighing negatively on its outlook, as a report is likely to indicate the highest manufacturing level in the United States in almost a year, attracting investors to higher-yielding currencies.

The U.S. dollar is posting losses versus its Canadian and Australian counterparts today after former Federal Reserve Governor Alan Greenspan said that the worst recession in decades is likely to be ending, decreasing attractiveness for the safety profile of the greenback, and attracting investors to yield. The Dollar Index was near this year’s low before a U.S. manufacturing report which is likely to reach the highest levels this year, rectifying evidences that the global slump is becoming a surpassed event, bringing investors to equities markets and emergent countries currencies. In Asia, currencies were favored by a report in the end of last week showing that South Korea grew at the fastest pace in six years.

The world is showing multiple signs of recovery, this time steadily, and this is dollar-negative, according to specialists. Oddly enough, favorable news in the U.S. economy are being interpreted as a sign of global economic recovery, pushing the dollar down, even if the nation’s economy is recovering.

USD/CAD fell to 1.0730 as of 10:15 GMT from an opening rate yesterday of 1.0775. EUR/USD is being traded at 2-month high levels at 1.4286 after topping at 1.4310 hours earlier.

Where Will Brazil’s Real Rally Go?

The Brazilian real posted another day of heavy gains versus the U.S. dollar indicating that the South American currency is one of the most preferred among risk thirsty traders.

The Brazilian currency reached an eleven-month high against the U.S. dollar as manufacturing in China, Brazil’s most relevant commercial partner, had the highest rise in a year, spurring demand for the real and improving attractiveness in South American stock exchange markets. The real climbed more than 1.5 percent versus the greenback today.

USD/BRL traded at 1.8364 as of 20:40 GMT from 1.8651 last Friday.

Canadian Dollar Climbs Fueled By Stocks Rally

The Canadian dollar reached a 10-month high versus its U.S. counterpart as corporate earnings, mainly in North America, but also in Asia and Europe, posted better-than-expected numbers, pushing investors to the already attractive Canadian currency.

The crude oil price rally during the past weeks has been favoring the Canadian dollar massively, since one of the main national exports to the U.S. is the oil, which experiences an increase on its price as demand for energy tends to grow in a recovering economy. Corporate earnings this week in the U.S. and Asia helped high-yielding currencies to gain even further, as the greenback and the yen tumbled to the lowest levels in more than a year. Manufacturing in China figures published yesterday, indicated the highest climb in a year, suggesting that the Asian nation is also being helped by global signs of economic recovery, as a higher demand influences its industrial production.

Analysts state that equities market gains have still a reasonable range to continue, and that the Canadian dollar is very likely to follow these movements. The crude oil may also help the Canadian dollar to climb, and it is not impossible that the loonie will be traded one-to-one versus its U.S. counterpart before the end of the year.

USD/CAD traded at 1.0697 as of 9:13 GMT from a previous rate yesterday of 1.0780.

Yen Rebounds on Stocks Correction Movement

After gaining sharply for three days in a row, today stocks declined around the world, fueling demand and opening a profit opportunity with the currently weakened Japanese currency, which is witnessing its first significant climb in a week.

Today, Bayerische Motoren Werke AG, commonly known to the public as the BMW vehicle manufacturer, posted a 76 percent decline in its profits, causing European stock markets to open in the negative, consequently attracting stock traders to safer positions like those available in refuge currencies, benefiting the yen. In Europe, a report is likely to indicate that producer prices declined at a strong pace, damping demand for the European common currency. Emergent-market currencies like the South African rand, and Commodity-linked currencies like the Australian dollar, posted the sharpest losses versus the yen, as these currencies tend to have a higher volatility due to their riskier profile.

Analysts indicate today’s movement as a correction, and also a pause in the current rally that higher-yielding currencies are imposing versus the yen. A number of traders are selling their positions in emergent-markets to take profits from last week’s rally, but it does not mean that the yen is starting a recovering pattern, the outlook for the Japanese currency still remains very negative.

GBP/JPY traded at 160.29 as of 9:53 after topping at 162.17 hours earlier. EUR/JPY traded at 136.11 from 137.69.

Will the Pound Rebound to Pre-Crisis Levels?

The pound posted today a positive performance versus the U.S. dollar bringing the British currency to the highest levels in more than 9 months, leaving speculations of an eventual rebound for the Great Britain currency.

A British construction index indicated today the slowest contraction in the sector in a 16 months period, which helped the pound to gain versus the greenback, reaching the highest level in 9 months, and versus the euro, topping at the strong rate in 30 days. The pound was one of the most affected major currencies since the global slump struck the world last year.

GBP/USD traded at 1.6939 as of 22:01 GMT from a previous rate yesterday of 1.6702.

Israel’s Sheqel Falls on Dollar Purchase Speculations

The Israeli currency had the sharpest fall in 4 months today as the government is likely to increase a dollar purchasing program to stimulate the national currency.

The Government of Israel started a program last year when the global slump had its worst moment to increase national exports competitiveness, buying U.S. dollar as an attempt to weaken the national currency. Today, the Israeli sheqel was amongst the worse performing world currencies losing more than 2 percent versus the greenback after the national central bank indicated that it may purchase more than $100 million a day in order to help the nation’s exporters.

USD/ILS traded at 3.8800 as of 21:19 GMT from an opening rate today of 3.7913.