Yen Beats Most Majors, Posts Weekly Gains

The Japanese yen gained this week against most major currencies as market sentiment was spoiled not only by fears of the European sovereign-debt crisis, but also by concerns that economic recovery in the United States is faltering.
The week started seemingly bad for safer currencies as a bailout for Spain lifted traders’ mood. The optimism was short-lived, though, and fears returned, especially after Moody’s Investor Service cut Spain’s credit rating. The week was bad for the USA from the fundamental point of view as a vast majority of indicators were worse than anticipated. In such an environment, it is only natural that demand for the yen returned. By the end of the week, Japan’s currency had another bullish factor: absence of quantitative easing. The Bank of Japan left its monetary policy unchanged, allowing the yen to profit from pessimism on the Forex market.
The yen was not moving in a straight line this week and Friday’s monetary policy decision of the BoJ significantly contributed to gains. Still, the Japanese currency closed higher against most majors by the end of the week. The pound was a noticeable exception as it was moving sideways versus the yen and even on Friday it managed to erase losses.
USD/JPY slid from 79.60 to 78.67 and EUR/JPY dropped from 100.62 to 99.46 this week. GBP/JPY closed at 123.62, near its opening rate of 123.46, after falling to the weekly low of 122.11.
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Dollar Suffers from Bad Fundamental Data

The US dollar fell today after bad fundamental reports spurred speculations that the Federal Reserve would implement the third round of quantitative easing nest week. The currency closed flat versus the euro.
Industrial production fell 0.1 percent last month instead of rising as was expected. The University of Michigan preliminary index of consumer sentiment unexpectedly dropped to 74.1 in June from 79.3 in the month before. The bad data supports the case for the Fed to ease its monetary policy. Economic stimulus means weaker dollar.
The greenback ended today’s trading session flat versus the shared European currency. The Greek elections this weekend are a major factor that may influence the Forex market strongly, but it is impossible to predict the outcome of the vote. Considering the uncertainty, it is not surprising traders preferred to be on the sidelines.
EUR/USD closed flat at 1.2636 today. GBP/USD surged from 1.5558 to 1.5712, reaching the high of 1.5728 intraday — the highest price since May 23. USD/JPY dropped from 79.33 to 78.67.
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Aussie Gains vs. Greenback & Euro, Falls vs. Yen

The Australian dollar rose against its US counterpart and climbed to the highest level since March versus the euro today. The currency declined against the Japanese yen, though trimmed its losses.
The Australian currency (often called “Aussie”) managed to rally today even amid uncertainty about the future of the eurozone ahead of the Greek elections this weekend and poor macroeconomic reports from the United States. Rumors about coordinated efforts of central banks prevented traders’ mood from turning to risk aversion, but Forex market participants were still rather uncertain about how to behave on unpredictable market. Anyway, sentiment was closer to optimism as was shown by the MSCI Asia Pacific Index of shares that gained 0.6 percent today.
The Aussie declined versus the yen, but that could be expected. The Japanese currency was simply too strong today after the Bank of Japan refrained from easing its monetary policy.
AUD/USD was up from 1.0024 to the daily maximum of 1.0089 (the highest level since May 10) as of 20:18 GMT today. EUR/AUD fell from 1.2598 to 1.2548, while today’s minimum of 1.2524 was the lowest since March 20. AUD/JPY declined from 79.51 to 79.38, while its intraday low was at 78.83.
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Euro Pulls Back a Little on Uncertainty

Euro is pulling back a little on uncertainty today. Euro was higher earlier on the news that central banks would coordinate efforts in the event that Greek elections go badly this weekend, but there is enough disquiet about what’s ahead that the euro is slightly lower.

Euro got a bit of a boost earlier on the expectation that central banks would unite in efforts to blunt the worst of the damage if Greek citizens decide to elect anti-austerity, anti-bailout politicians. That decision by Greeks could very well result in Greece’s withdrawal from the eurozone. That withdrawal could, in turn, be seen as an encouragement for other countries to withdraw from the currency union. Global economic concerns aren’t helping the situation, either.
Concerns about the euro are there, but most Forex traders appear to be taking a wait and see approach. It depends on how the June 17 election turns out. There is enough hope to keep the euro from completely tanking, and just enough uncertainty to give the US dollar the edge on the Forex market. It’s a pivotal weekend for the euro, and the coming week is likely to set the course for the 17-nation currency.
At 15:23 GMT EUR/USD is slightly lower at 1.2630, down from the open at 1.2632. EUR/GBP is down to 0.8072 from the open at 0.8119. EUR/JPY is down to 99.4285 from the open at 100.2265.
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Canadian Dollar Pulls Back on Global Economic Concerns

Even though investors are sending stocks higher, there are plenty of concerns about the economy dragging down some of the high beta currencies, including the Canadian dollar. Loonie is down against the US dollar, heading lower on expectations of a slowing global economy.

Concerns about the crisis in Europe, slowing growth in China, and sluggish recovery in the United States are all weighing on Canada, which relies heavily on exports (especially oil) for its economic support. With the global economy’s future in doubt, demand for Canadian exports is expected to slip, and that is providing downward pressure on the loonie.
It’s not just other countries’ economies that are of concern, though. Statistics Canada reports that factory sales have fallen in Canada for the third time in the last four months. On top of that, there are worries that oil prices could actually fall below $80 a barrel. Even though oil is a little higher today, there are worries about what’s coming, especially if Europe can’t pull things together. So, for now, it’s not much of a surprise that the Canadian dollar is struggling, especially against its US counterpart.
At 14:38 GMT USD/CAD is higher at 1.0235, up from the open at 1.0226. GBP/CAD is higher at 1.5992, up from the open at 1.5915.
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Won Gains on Hopes for QE3 from Fed, Gains Limited

The South Korean won rose today as speculations that the US Federal Reserve would stimulate the slowing economy continued to bolster higher-yielding assets of emerging markets.
The won profited, as most other currencies associated with higher risk, from increasing probability of the third round of quantitative easing from the Fed. Gains were limited, though, as uncertainty about the outcome of the elections in Greece this weekend reduced investors’ willingness to risk. Analysts said that the currency were weaker because speculators were covering their short positions and Korean importers were buying dollars.
USD/KRW fell from 1,164.6000 to 1,162.9000 as of 10:43 GMT today. The intraday low was at 1,159.6000.
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Yen Jumps After BoJ Refrains from Stimulus

The Japanese yen climbed against all other major currencies today after the Bank of Japan left its monetary policy unchanged, refraining from expanding monetary stimulus.
The BoJ left its main interest rate near zero and the size of asset purchases unchanged at today’s policy meeting. The central bank voiced hopes in its statement that the economy will “return to a moderate recovery path as domestic demand remains firm and overseas economies emerge from the deceleration phase”. Still, the bank recognized threats from the escalating European crisis and the slowing US economic growth. The absence of further easing of the monetary policy helped the yen, which previously were weakened by expectations of stimulating measures from the BoJ.
USD/JPY fell from 79.33 to 78.86 and EUR/JPY dropped from 100.20 to 99.59 as of 9:19 GMT today.
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