iFOREX | Apr 23, 2013 05:20AM ET
The U.S. Dollar retreated against the Yen and traded mixed against the majority of its most traded peers after economic reports showed an unexpected decline in U.S. Existing Home Sales. According to the National Association of Realtors, the sale of existing homes fell 0.6 percent in March to a seasonally adjusted 4.92 million units from a revised 4.95 million in February. The greenback came close to reaching a four-year high against the Yen after the group of 20 Finance Ministers and central bankers concluded that Japan’s monetary easing measures were aimed at ridding the country of deflation and were not meant as a means to devaluate the currency. The Canadian Dollar came close to trading at a six-week low versus its American peer, following the release of disappointing Homes Sales figures which fueled speculation Canada won’t be able to count on its biggest trading partner for help. On the flipside, the Loonie rallied against the currencies of Australia and New Zealand as investors were speculating that a recent drop in metal prices would not hurt Canada as much as it may hurt other commodity exporting nations.
The Euro slipped against the U.S. Dollar as the G-20 agreed to back Japan’s monetary policies, and as weak economic data out of the U.S. limited the greenback’s advance. Ongoing talk about the possibility the European Central Bank may cut the cost of borrowing money also weighed on the shared currency. The Euro rose early in the day after Italy announced the re-election of Giorgio Napolitano to the presidency. Mr. Napolitano, an 87-year old politician, indicated that he would attempt to end the political gridlock that has prompted the instability the country has experienced since its inconclusive elections. The Euro gapped higher as the Asian session begun, but the gap was quickly filled prompting the Euro to weaken against the greenback. The British Pound rallied against the Euro after three weeks of losses in anticipation of this week’s government releases which are anticipated to show that the U.K. has averted a triple-dip recession. The Sterling rose versus most of the majors on rumors the Chancellor of the Exchequer, George Osborne, will reveal another strategy aimed at bolstering credit for small businesses and individual consumers.
And while all eyes were on the USD/JPY, the Japanese currency climbed after it failed to drop to 100 per Dollar, as the U.S. reported lackluster Existing Homes Sales for last month. The currency was also supported by news that Japan obtained the green light to continue with its unprecedented easing measures. The news spurred the possibility the central bank may announce another bout of aggressive measures on April 26th.
Lastly, the Australian and New Zealand Dollars remained almost unchanged against the greenback as the outlook for global growth continued to weigh on investors.
EUR/USD- ECB May Cut Rates
The Euro started the week strongly against the U.S. Dollar but declined as market investors waited to obtain the results from a preliminary purchasing manager’s survey, which analysts believe could push the European Central Bank to lower the costs of borrowing money. According to Reuters, the index may show that the Euro region has done very little to jumpstart the faltering economy. However, policy makers have stated they’ll wait to see what future data shows. With the poor metrics out of China and U.S., speculators believe German exports will show declines. The shared currency dropped further versus the greenback as the group of Industrialized nations who met last week gave their support for Japan’s aggressive monetary measures, and bolstered speculations this will lead to Japan loosening policy even more. Today, the Euro region will issue data on Manufacturing and activities in the Services sector.
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