The US Dollar Over the Last MonthJul 12 • Categorized as Offshore Banking
by Ian Cragg
The US dollar has seen various changes of fortune over the last month. Worries persist in the Eurozone and have caused the Dollar to remain a safe haven for worried investors. This month has seen the currency’s fortunes vary as poor economic data released by a number of nations effects the currency markets. At the end of June the Eurozone leaders announced plans to curb the ongoing Euro crisis, this news saw investors abandon the Dollar for a time as risk sentiment soared, but like all things to do with Europe lately, confidence in the proposals quickly diminished and saw demand for the safe haven Dollar rise once again.
The Dollar vs. The Pound (USD vs.GBP)
The Dollar started the month as the biggest loser in the currency markets after the buoyant mood from the outcome of the EU summit galvanised demand for riskier assets and currencies. Against the ‘Greenback’ the Pound was trading at the 1.571 level but all too quickly confidence in the EU leaders’ plans began to wane. As the weeks progressed the Pound weakened hitting a one month low against the Dollar after the Federal Reserve revealed that it would keep its interest rates at the 0.25% level.
Last week a combination of poor job figures and the Federal Reserve congressional hearing caused the Dollar to slide against the Pound. The Pound then hit a fresh two week high as traders hoped for further quantitative easing measures, Fed Chairman Ben Bernanke has dismissed this so it is expected that the Dollar will reverse its losses as the markets come to terms with the choice. At the end of the month the Dollar was trading in the region of 0.638 against the Pound.
The Dollar vs. The Canadian Dollar (USD vs. CAD)
The Canadian Dollar opened the month following the same pattern as many other currencies in trading up against the US Dollar. A set of strong economic figures and growing business confidence saw the ‘Loonie’ post gains against its neighbour.
The Loonie’s gains were short-lived however, as by the 10th July the currency sank to a monthly low as oil fell below $84 and other commodities declined in value. The Canadian Dollar has declined by 2.3% since March. After the release of the Federal Reserve’s minutes and Bernanke’s address to congress, the currency rose against the ‘Greenback’. Rising oil and commodity prices also boosted the Canadian Dollar’s value. At the end of the month the Dollar was trading in the region of 1.010 against its Northern neighbour.
The Dollar vs. The Australian Dollar (USD vs. AUS)
The Aussie began the month at its highest level since the 4th May. By the 10th the currency had weakened against its American cousin after the US posted worse than expected jobs data, prompting investors to seek shelter in the Greenback’s safe haven status. Consumer confidence in the Australian economy saw the country’s currency jump to a 6 month high against the US equivalent, it didn’t stay at those lofty heights for long however, and dipped on the back of poor economic data out of its main trading partner China.
The Aussie rose again by the end of the month and continues to push higher as commodity prices improve.
The Dollar vs. The Euro (USD vs. EUR)
The buoyant mood that emanates from the Eurozone finance ministers’ meeting at the end of June saw the single currency hit a two year high against the US Dollar. As the first few weeks of the month went by investor confidence in the proposed rescue plans began to wane, until the Euro hit all time lows against a basket of currencies and the ‘Greenback’ made gains due to its safe haven status. As the month draws to a close the Euro is expected to stay low against the Dollar.
The Dollar vs. The Hong Kong Dollar (USD vs.HKD)
At the beginning of July the HKD was trading at 7.754.Because of the influence of the Yuan the HKD is tied to the data released by China. In mid July the HKD stood at 7.756. The Euro crisis has also impacted on the HKD. The HKD is expected to remain steady at the 7.756 level.
The Dollar vs. The United Arab Emirates Dirham (USD vs.AED)
Currently the UAE is trading in the region of 3.67300.The Dirham remains directly pegged to the US Dollar, so any relative strength, or weakness, in the USD is directly mirrored in Dirham movements.
The Dollar vs. The Singapore Dollar (USD vs.SGD)
At the beginning of July the SGD was trading at 1.26. The Island’s economy saw a surprise fall as its manufacturing fell and signs of an Asian slowdown dragged on the currency. GDP fell an annualized 1.1 percent in the three months through June from the previous quarter, when it climbed a revised 9.4 percent. It is expected that the SGD will remain trading in the region of 1.254 as the continuing Euro crisis draws investors back to the US Dollar and safer currencies.
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