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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Mexican Peso Rises as Traders Put Hopes on Central Banks

The Mexican peso gained on speculations that the Federal Reserve will stimulate the US economy as measure to support the faltering recovery and on rumors that European central bank will coordinate their efforts to bolster the European economy.
With the recent wave of negative macroeconomic data from the United States, the third round of quantitative easing is a definite possibility. Aryam Vazquez, an economist at Wells Fargo & Co., voiced his opinion regarding the influence of US fundamentals on riskier assets with higher yield:

It’s a given that every time we get weak data here in the US, QE3 talk begins to increase. These robust liquidity prospects certainly aid emerging-market assets such as the Mexican peso.

There are rumors that central banks in Europe or even from other parts of the world will coordinate their efforts to boost liquidity in financial markets. There is not much information about that plan, if it indeed exists, but investors are happy to swallow any piece of good news after the constant stream of negativity.
USD/MXN traded at 13.8880 as of 1:50 GMT today after it fell from 14.0260 to 13.8700 yesterday. EUR/MXN declined from 17.5620 to 17.5428 on today’s trading session.
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Euro Gains as US Data Sparks Talks About Stimulus

The euro advanced against other major currencies today as poor macroeconomic data from the United States weakened the dollar and spurred speculations that the Federal Reserve will stimulate the economy to support the faltering recovery.
The recent streak of negative fundamental reports gave evidence that US recovery is not as robust as many economists were thinking before. The Consumer Price Index was down 0.3 percent in May, while it was stable in the preceding month. Claims for unemployment benefits climbed from 380,000 to 386,000 last week, while analysts promised that the claims would stay unchanged. The Fed policy makers will meet on June 19 to discuss monetary policy and it will be interesting to see how they react to the negative indicators.
As for Europe, there was no reason to be optimistic about the region, especially after Spain was downgraded. Nevertheless, the Forex market was surprisingly favorable to those who prefer risk today. The optimism is unlikely to persist for long, but for now those who seek higher yield are in a good position to trade.
EUR/USD rose from 1.2563 to 1.2627 and EUR/JPY climbed from 99.76 to 100.25 as of 23:23 GMT today. EUR/GBP was up from 0.8100 to 0.8119.
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US Dollar Index Slips

US dollar index is slipping today as Forex traders find risk appetite, even though there is little good news coming out of Europe. Instead of seeing risk aversion today, there is a bit of risk appetite, and that is sending the US dollar lower against its major counterparts. Also weighing on the US dollar is the possible of an extension of Operation Twist.

US economic data continues to offer a mixed bag, showing sometimes-encouraging results which are balanced out by disappointments. What is clear, though, is the fact that the US economy isn’t recovering at the pace expected. And, interestingly, there is a little bit of hope right now for the eurozone. In spite of not having a plan to contain sovereign debt contagion, and in spite of growing bond yields in Spain and Italy, the euro is getting a boost.
Some of that boost, though, may not be entirely due to risk appetite. There is speculation that the Federal Reserve will extend Operation Twist in its June meeting, even though no one expects QE3 to start anytime soon. That continued monetary easing could be one reason the dollar index is struggling today.
At 14:32 GMT dollar index is down to 81.971 from the open at 82.148. EUR/USD is up to 1.2595 from the open at 1.2558. GBP/USD is up to 1.5548 from the open at 1.5505. USD/JPY is down to 79.2685 from the open at 79.4845.
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UK Pound Mixed Today

UK pound is mixed today, gaining against the US dollar, but pulling back against the euro. Risk appetite is making a cautious appearance in the currency markets, even with trouble in the eurozone. Indeed, pound’s fall against the euro is a bit of a surprise after the British currency’s recent gains.

Earlier, the UK pound logged gains against the euro, as Fitch warned again that AAA countries in the eurozone could be facing a downgrade. With concerns about Italian borrowing costs (which are on the rise), and trepidation over the upcoming Greek elections, some had expected the euro to remain lower a little bit longer. However, the pound can’t seem to maintain its gains against the euro. Against the US dollar, though, sterling is seeing some solid gains on a modest amount of risk appetite.
Questions about the UK economy are being asked as well, though. Britain has been unable to kickstart its economy through a combination of austerity and quantitative easing. The program hasn’t been expanded recently, but members of the Bank of England have been walking a fine line between keeping a lid on inflation and trying to stimulate the economy. More confusion about the pound is likely to result in the future.
At 13:50 GMT EUR/GBP is up to 0.8102 from the open at 0.8098. GBP/USD is up to 1.5534 from the open at 1.5505.
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Rupiah Falls as Moody’s Downgrades Spain, Recovers

The Indonesian rupiah fell today, leading other Asian currencies in decline, after Moody’s Investors Service downgraded Spain’s sovereign-credit rating, refueling concerns caused by the crisis in the countries of the eurozone. Currently the rupiah recovered after the loss.
Moody’s announced that it “downgraded Spain’s government bond rating to Baa3 from A3, and has also placed it on review for possible further downgrade”. The reasons for such decision the rating agency cited were: a bailout that will increase the debt burden of the country, very limited access to financial markets and the weakness of the Spanish economy. The announcement had a very bad impact on mood of Forex traders that were already tense ahead of the Greek elections this weekend.
USD/IDR jumped as high as 9,472.5000 before retreating to the opening level of 9,397.5000 as of 13:06 GMT today.
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SNB Keeps Libor Unchanged, Reiterates Pledge to Keep Ceiling

The Swiss franc was flat today against the US dollar and fell versus the Japanese yen after the Swiss National Bank maintained its main Libor interest rate and reiterated the pledge to keep the cap on the currency.
The SNB kept its benchmark interest rate near zero. Thomas Jordan, the Vice Chairman of the Governing Board, repeated his pledge to keep the currency cap at 1.20 francs per euro. He said:

Even at the current rate, the Swiss franc is still high. Another appreciation would have a serious impact on both prices and the economy in Switzerland. The SNB will not tolerate this.

Jordan also stated that the crisis in Europe is a major threat to the Swiss economy.
USD/CHF was near its opening level of 0.9557 as of 12:08 GMT today, while CHF/JPY fell from 83.06 to 82.89.
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NZ Dollar Gains After RBNZ Keeps Key Rate Stable

The New Zealand dollar started today’s trading session posting gains after the Reserve Bank of New Zealand decided to keep its key Official Cash Rate unchanged and hinted that the economy may expand.
The RBNZ left its main interest rate unchanged at 2.5 percent today. Bank’s Governor Alan Bollard mentioned in the statement after the decision the problems in Europe (one of the key trading partners of New Zealand):

Political and economic stresses in Europe, along with a run of weaker-than-expected data, have seen New Zealand’s trading partner outlook worsen. Furthermore, there is a small but growing risk that conditions in the euro area deteriorate more markedly than is projected in the June Statement.

Bollard explained that, on the negative side, the weakening global outlook hurt nation’s export. On the positive side, the Governor spoke about improving housing market and construction sector. According to central bank’s estimates, gross domestic product will rise just above 3 percent next year.
NZD/USD rose from 0.7750 to 0.7758 and NZD/JPY picked up from 61.51 to 61.57 as of 2:59 GMT today. EUR/NZD went down from 1.6197 to 1.6182.
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Poor US Fundamentals Sap Strength of Loonie

The Canadian dollar fell today against most of its major peers as poor fundamental reports from the United States dimmed prospects for Canadian exports, while European problems still damp demand for currencies tied to growth.
There was a bunch of unfavorable data from the USA today. Retail sales were down 0.2 percent in May. The Producer Price Index dropped 1.0 percent, while market participants hope from much smaller decline. On top of that, an inflation report tomorrow is expected to show a slowdown by 0.2 percent.
Globally, the situation did not improve much as Europe and its credit woes continue to sap willingness to risk from investors. The Standard & Poor’s 500 Index fell 0.6 percent. Crude oil edged down as much as 1 percent.
USD/CAD climbed from 1.0257 to 1.0293 and EUR/CAD advanced from 1.2833 to 1.2932 as of 21:50 GMT today. CAD/JPY ticked down from 77.51 to 77.12.
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Euro Holding to Earlier Gains

Euro is holding to earlier gains, and even building again, thanks to an appearance of risk appetite. Earlier, risk appetite faded a bit after US retail sales data, but now there appears to be a resurgence in a desire for riskier assets. The euro, as a result, is regaining its advantage against the US dollar.

Earlier, euro pared its gains as the US dollar began creeping higher. Concerns about the US economy were weighing on risk assets. However, US stocks are moving from the red into the black, and there are hopes that the eurozone will survive whatever happens this weekend with Greek elections.
Even as major powers dither about what’s next for the eurozone, euro is doing just fine. Joblessness in Europe is a concern, and no one is certain that Greek elections will result in a scenario that allows the beleaguered country to remain in the currency union. However, these worries have been pushed back for now. Forex traders and investors are looking for a little more yield, and even JP Morgan CEO Jamie Dimon‘s appearance before US Congress isn’t dampening spirits.
For now, the euro is heading higher. However, this state of affairs may prove to be short-lived. There is just too much possible disappointment in the eurozone right now.
At 14:55 GMT EUR/USD is up to 1.2571 from the open at 1.2504. EUR/GBP is up to 0.5069 from the open at 0.8030.
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US Dollar Begins Drifting Higher on Risk Aversion

Greenback may be lower against the euro right now, but it is already showing signs of drifting higher as risk aversion makes an appearance. Retail sales data in the United States was disappointing, and now riskier assets are losing ground. That means that the euro may not have the upper hand for much longer.

For now, US dollar is lower, and the dollar index is down. However, the greenback is moving higher against the UK pound, and paring some of its losses against the euro. Risk aversion is likely to make an appearance, thanks to disappointing economic data. US retail sales showed a decline of 0.2% overall, and wholesale-level inflation fell 1% in May. Business inventories climbed 0.4% in May as well. The indications of a slowdown are weighing on risk.
The idea that the US economic recovery could stall out — or even return to a state of recession — is weighing on riskier currencies. The euro may be higher after the risk rally yesterday, but it’s increasingly looking as though that rally was a one-time thing, and the euro could easily fall behind.
At 14:18 GMT EUR/USD is higher at 1.2538, up from the open at 1.2504. GBP/USD is down to 1.5553 from the open at 1.5570. USD/JPY is down to 79.3900 from the open at 79.5335.
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Franc Gains vs. Dollar, Tests Resolve of SNB to Keep Ceiling

The Swiss franc appreciated for the second day against the US dollar today as fears of escalating sovereign-debt crisis in Europe forced investors seek a safe haven. The currency was flat against the euro.
Forex traders become more and more tense as the Greek elections near and Spain’s trouble mounting. The Swiss National Bank is hard pressed to keep the cap of 1.20 francs per euro as market participants flock to the safety of the franc. The foreign-currency reserves of the SNB jumped last month, hinting that the central bank increased euro purchases to maintain the ceiling. So far, the SNB has managed to support the ceiling, but analysts are skeptical about its ability to do so for long.
USD/CHF fell from 0.9598 to 0.9591 as of 8:20 GMT today, following the earlier advance to 0.9627. EUR/CHF stayed flat at 1.2010.
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Mexican Peso Keeps Gains Amid Speculations About Fed’s QE3

The Mexican peso climbed yesterday and kept its gains today amid speculations that the US Federal Reserve would increase its stimulus for the US economy, improving prospects for export-oriented countries.
Federal Reserve Bank of Chicago President Charles Evans hinted that he would vote for easing measures, though he does not vote on the Federal Open Market Committee this year. Nevertheless, the comment shows that US policy makers did not forget about quantitative easing entirely. It is not surprising, considering disastrous employment data that was released at the start of this month. Most of Mexican gains goes to the United States, therefore performance of the US economy strongly affect Mexico’s currency.
USD/MXN was flat at 13.9760 as of 7:40 GMT today after it fell from 14.0890 to 13.9730 yesterday.
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Pound Profits from Fears About Future of Eurozone

The Great Britain pound gained today as Forex traders quickly lost belief that the bailout for Spain would resolve the countries problems. Fears returned to the FX market and pound again was considered a refuge from Europe’s woes.
Fitch Ratings said that countries of the eurozone face a risk of credit rating downgrades. Edward Parker, the Managing Director of the rating agency, even stated that the currency union may break up if there will be “no light at the end of the tunnel soon”. The comments helped the pound’s return to its role as haven from problems of the euro-area.
The sterling also got boost from domestic fundamentals. Royal Institution of Chartered Surveyors reported that its house price index rose to -16 in May from -19 in April. The actual value was slightly better than the forecast figure of 17.
GBP/USD rose from 1.5477 to 1.5566 and GBP/JPY climbed from 122.93 to 123.79 as of 23:56 GMT today. EUR/GBP fell from 0.8057 to 0.8030.
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Aussie Finds Support against Majors

Aussie is finding support against other majors today, reversing earlier losses. Thanks to a little boost from gold, and Australia’s connection to the Chinese economy, Aussie is eking out modest gains.

Australian dollar headed lower earlier today, dropping as risk aversion set in. With Spanish bond yields rising, and Fitch warning that more downgrades could be coming for AAA countries in the eurozone, high beta currencies like the Aussie were falling. However, Australian dollar is now finding itself with a measure of support.
Gold prices have topped $1,600 an ounce. Aussie is tied to gold as a commodity currency, and that gain is helping make the Australian dollar a little more attractive. Additionally, Australia is a major trading partner with China. With Chinese efforts to stimulate the economy apparent, there are expectations that the Aussie economy could benefit. These developments are providing the Aussie with some gains, even though the general mood amongst Forex traders is one of risk aversion.
Things could change quickly, though. The markets remain volatile, and uncertainty is high. But, for now, the Australian dollar is supported.
At 14:55 GMT AUD/USD is higher at 0.9903, up from the open at 0.9875. EUR/AUD is lower at 1.2580, down from the open at 1.2635. The pound is higher against Aussie, though, with GBP/AUD up to 1.5686 from the open at 1.5673.
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Euro Struggles Continue on Debt Concerns

Euro continues to struggle as debt concerns remain in the spotlight. The ratings agency Fitch has issued a warning that downgrades are possible for the AAA nations in the currency region. Additionally, Nouriel Roubini is calling for lower taxes and higher salaries to stimulate the economy in Europe. Right now, eurozone leaders look unable to handle the crisis, and that is weighing on the euro.

It is little surprise that the euro is having trouble right now. Every move that eurozone leaders makes seems just as ineffective as the last move, whether Greece is being bailed out or Spain is. And, of course, there are worries that Italy could be next. Enforced austerity measures don’t seem to be helping much either, since many believe that more spending could help stimulate the economic activity needed for the eurozone to get out of this mess.
Fitch insists that the countries in the eurozone with AAA ratings are at risk for downgrades as the crisis continues. On top of that, famed economist Nouriel Roubini says that the austerity is hampering efforts at recovery, and that more spending is needed to stimulate the eurozone if leaders want to avoid recession. With all of this, it is no surprise that the euro is down.
At 12:26 EUR/USD is down to 1.2455 from the open at 1.2482. EUR/GBP is down to 0.8026 from the open at 0.8061.
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Swedish Krona Rises Even After CPI Slows

The Swedish krona was rising today even after a report that showed nation’s inflation slowing. The crisis in the eurozone has hurt Sweden’s economy, but economists say that the economic situation in the country itself is beginning to stabilize.
Statistics Sweden reported today that the Swedish inflation rate fell to 1.0 percent in May from 1.3 percent in April. That was in line in analysts’ expectations. The currency has dropped sharply after the report, but quickly regained its strength. The krona was rising almost every day of this month, though it depreciated strongly yesterday.
USD/SEK fell from 7.1235 to 7.0698 as of 10:40 GMT today.
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Yen Falls as IMF Considers It Overvalued

The Japanese yen fell today as the International Monetary Fund voiced opinion that the currency is overvalued and Japan’s monetary authorities should take steps to weaken the yen.
The IMF stated that the Japanese currency is “moderately overvalued”. David Lipton, the First Deputy Managing Director of the IMF, suggested that Japan’s policy makers should perform an intervention. Losses of the yen were limited as demand for safety rises on the Forex market.
USD/JPY was flat at 79.49 as of 10:03 GMT today after it touched the daily high of 79.69. EUR/JPY was up from 99.14 to 99.47.

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NZ Dollar Falls as Optimism for Spain Proves to Be Fleeting

The New Zealand dollar fell against the Japanese yen and the US dollar, rising versus the euro at the same time, after the announcement of the €100 billion rescue package for Spain.
Initially, the reaction to the announcement was very positive. The optimistic feelings among Forex traders proved to be short-lived and concerns for the future of the eurozone are mounting again. According to reports, the International Monetary Fund refrained from participating in the bailout, signaling that the international community is skeptical about prospects for the euro-area. Prime Minister Mariano Rajoy admitted that Spain is going to face hard times (though, the situation there is not pretty even now).
Market analysts were rather dazed by a short lifespan of positive mood among Forex traders. It is true that not may believed in long-lasting optimism, but it was still somewhat unexpected to how fast see any positivity was evaporated from the FX market.
NZD/USD was down from 0.7766 to 0.7682 and NZD/JPY slumped from 61.82 to 60.88 as of 23:51 GMT today. EUR/NZD traded near 1.6230 after falling from 1.6254 to 1.6152 — the lowest level since May 2.
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Yen Gains as Forex Market Leaves Risk-On Mode

The Japanese yen rose today against most major currencies as the Forex market shifted from risk-on mode to risk aversion. The currency erased its earlier losses that were caused by positive market sentiment.
The news that Spain will get a €100 billion bailout spurred optimism among investors, but that positive mood was short-lived. Market participants are worried that the rescue would not solve the problems of the fourth-largest economy of the eurozone. On top of that, other nations that have received an aid may be frustrated as terms for Spain’s rescue look less demanding than those of Greek and Ireland’s bailouts.
Last week was bad for the yen as positive market sentiment diminished demand for safer assets. This week has started good for the Japanese currency and it is possible that appeal of safe currencies will return as Greek elections near and tensions regarding their outcome grow.
USD/JPY fell from 79.60 to 79.44 and EUR/JPY went down from 100.62 to 99.24 as of 19:38 GMT today. GBP/JPY was at about 123.09 after rising from 123.46 to 124.04.
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Canadian Dollar Falls Back as Risk Appetite Fades

Canadian dollar received a boost earlier, but the good news has since faded. A short-lived risk rally helped the loonie higher, but now concerns over what’s next for Europe have sent the currency down against the US dollar as uncertainty sets in and increases the demand for safe haven.

Once the news of the Spanish bailout was released, riskier assets received a boost. Canadian dollar was part of that rally, benefitting as Forex traders enthusiastically looked for risk and the yield that comes with it. Unfortunately for high beta currencies, Forex traders and other investors quickly soured on the Spanish bailout news. The situation solves none of the eurozone problems; some say it merely delays the inevitable.
So, with risk appetite fading again, the Canadian dollar is losing ground against the US dollar. It’s not helping that oil prices are below $84 a barrel. Loonie relies on oil for support, and dropping oil prices, along with the dissipation of risk appetite, are weighing on the Canadian dollar. Until there is more solid progress made in the eurozone, loonie is likely to find it difficult to sustain lasting gains against the US dollar.
At 14:51 GMT USD/CAD has gained to 1.0277, up from the open at 1.0223. GBP/CAD is up to 1.5929 from the open at 1.5857. EUR/CAD is lower, though, at 1.2865, down from the open at 1.2918.
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US Dollar Pulls Back on Spanish Bailout

The announcement that eurozone leaders are ready to bailout Spain is boosting risk appetite today, and sending the US dollar lower. Even though some of the euro’s gains have been pared since the news was announced, greenback is still mostly lower in Forex trading. US dollar is heading down as Forex traders consider that the euro might not be doomed after all.

Once again, the volatility of the Forex market is asserting itself as traders consider what is next. The US dollar, which saw some solid strength last week, is starting out the week a little lower. However, even though the greenback is showing some weakness, a lot of the advantage that high beta currencies saw from the Spanish bailout news is dissipating. Euro is slipping against the US dollar, and the UK pound is off its highs.
Even with the bailout of Spain, it isn’t certain that things will settle down. The US dollar is still likely to remain in demand, to some degree, for some time as the world tries to figure out where it’s headed next. What happens in Europe is going to be a big part of that, and greenback as a safe haven will be important to many.
At 14:07 GMT EUR/USD is down to 1.2546 from the open at 1.2640. GBP/USD is higher at 1.5533, up from the open at 1.5513.
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Ringgit Gains as Spain’s Bailout Improves Traders’ Mood

The Malaysian ringgit gained today, following other Asian currencies in gains, as the news about a bailout for Spain fueled optimism among investors and attractiveness of higher-yielding assets.
The bailout for Spain eased tensions about the situation in the eurozone and made traders look at riskier assets in more favorable light. The MSCI Asia-Pacific Index of stocks gained as much as 1.9 percent. Additionally, Malaysian industrial production advanced 3.2 percent in April from a year ago, while the average forecast was 2 percent.
USD/MYR fell from 3.1920 to 3.1710 as of 10:12 GMT today, while the intraday low was at 3.1540.
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Euro Jumps on Bailout for Spain

The euro jumped sharply at the beginning of today’s trading session as Spain is going to receive a rescue from the European Union. The currency weakened after the initial rally, but remained far above the Friday’s close.
Spain asked for €100 billion aid, becoming the fourth European country that asked for a bailout. The Stoxx Europe 600 Index of equities advanced as much 1.8 percent. The euro opened far above the Friday’s closing level, but was retreating after the jump. Still, the currency remains above the last session’s high for now.
EUR/USD was up from 1.2639 to 1.2668, the highest rate since May 23, before trading at 1.2593 as of 9:31 GMT. EUR/JPY traded near 100.16, following the climb from 100.62 to 100.90 — also the highest since May 23.
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Australian Dollar Posts Weekly Gains, Reverses Downtrend

The Australian dollar had a nice rally this week as positive domestic fundamentals added to improving market sentiment that pushed currencies related to growth higher. That was a refreshing sight after a long stretch of declines.
The Aussie was rallying for the most part of the week, demonstrating a particularly strong performance on Wednesday. That is a pleasant turn of event, considering that the currency has entered a downtrend in the beginning of March. It is too early to consider that the Australian dollar has entered uptrend, but it looks like the one-way downside move has ended. Many Forex analysts think that too many negative events were priced in and the currency is ready to move even higher, especially if market sentiment continue to improve.
The beginning of this week looked not very good for the Aussie as investors’ mood was not particularly good. Yet the Australian currency managed to move up in that unfriendly environment, even after the Reserve Bank of Australia cut interest rates for the second time in a row. The positive GDP report provided a major boost and was followed by the good employment data and the unexpectedly small trade balance deficit. Overseas, thing were also supportive for the Aussie as China decreased its interest rates and rumors that Spain might get an aid lifted up Forex traders’ mood.
AUD/USD advanced from 0.9699 to 0.9913, reaching 1.0002 on Thursday — the highest price since May 15. EUR/AUD declined from 1.2797 to 1.2617. AUD/CAD climbed from 1.0073 to 1.0180 this week and its weekly maximum was at 1.0248, the highest level since May 1.
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Aussie Erases Losses as Market Sentiment Turns to Optimism

The Australian dollar fell against most major currencies today, but reversed losses by the end of the session as attractiveness of riskier assets returned after market sentiment improved somewhat.
Investors’ mood was downbeat at the beginning of today’s trading session, but it brightened by the end of the day. It was not full-fledged risk-on sentiment, but there was definitely less negativity on the Forex market and commodity currencies profited from that. The weekend brings element of uncertainty because of rumors that Europe’s financial chiefs will discuss a bailout for Spain, but the week ended on more or less positive note.
Domestically, the Aussie (the nickname of the Australian currency) was supported by the report about trade balance that showed a deficit falling much more than anticipated. On a seasonally adjusted basis, the deficit shrank to A$203 million in April from A$1,079 million in March. A decrease to A$920 was predicted by experts. Speculators trimmed their bets on another interest rate cut by the Reserve Bank of Australia this week’s fundamental reports were unexpectedly good.
AUD/USD closed at 0.9913 up from 0.9894, while during the session the currency pair reached the low of 0.9821. AUD/JPY closed flat at 78.80, erasing the earlier slump to 77.68. EUR/AUD declined from 1.2688 to 1.2617 and its intraday minimum of 1.2583 was the lowest since April 16.
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Loonie Suffers from Poor Canadian Employment Data, Recovers

The Canadian dollar dropped against its US peer and the Japanese yen as a set of poor fundamental data was released today. The currency managed to trim its losses against the yen and advance versus the greenback as well as the euro.
Canada’s employment was unchanged (demonstrated zero percent change) in May. Canadian employers added just 7,700 jobs last month, compared to 58,200 in the month before. Trade balance posted an unexpected deficit of C$367 million in April. Jim Flaherty, Canada’s Minister of Finance, said that the country can bolster liquidity in its own financial system in case the global economic situation demands it.
Forex market analysts noted that general negative mood of traders had, perhaps, stronger impact on the loonie (as the Canadian currency usually nicknamed because of the image of an aquatic bird on C$1 coin) that domestic fundamentals. Poor macroeconomic data from the European Union and concerns that Spain might require a rescue weakened demand for commodity currencies. As for positive news, Mark Carney, Bank of Canada’s Governor, reiterated this week that an interest rate hike may become warranted as the economy recovers. Whatever the case, the loonie managed to recover after the initial losses.
USD/CAD was at 1.0278 as of 19:20 GMT today after climbing from 1.0282 to 1.0353. EUR/CAD was down from 1.2912 to 1.2858. CAD/JPY traded at about 77.26, following the earlier drop from 77.39 to 76.39.
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US Dollar Heads Higher on Return of Risk Aversion

US dollar is heading higher today as risk aversion returns to the markets and investors and Forex traders look for safe haven assets. Global economic uncertainty has many wondering what will happen next, and even the threat of QE3 in the United States isn’t keeping the dollar down today.

Greenback is lower today, thanks to risk aversion. Forex traders are looking for capital preservation more than yield, and that means the US dollar is the currency of choice — along with the Japanese yen. The latest news out of Europe is disappointing, and global economic growth continues to slow.
In Europe, Italy and Germany reported worse than expected economic data. China recently cut its interest rate because of worries about slowing economic growth. Since China might not be ready to help the global economy out of its doldrums yet, investors are trying for safety.
Another concern is quantitative easing. While QE3 would weaken the US dollar somewhat, right now Forex traders are more interested in capital preservation, and it’s not certain that Ben Bernanke and the  Federal Reserve are quite ready to pull the trigger.
At 15:38 GMT EUR/USD is down to 1.2491 from the open at 1.2560. GBP/USD is down to 1.5433 from the open at 1.5527. USD/JPY is lower at 79.5185, down from the open at 79.6300.
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Euro Falls as Global Growth Concerns Return

Euro is falling once again, thanks to concerns with global growth. Economic weakness in the eurozone, as well as another downgrade for Spain, are weighing on the euro. It’s not helping, either, that growth in the rest of the world is rather toned down as well.

The big news today, of course, is that Fitch dropped Spain’s credit rating to just two notches above junk status. Concerns about Spain’s banking system are still causing problems, but many think that the eurozone will eventually pull it together, due to the proposition of a unified European depository organization.
Other worries center around global economic growth. Disappointing economic data in Germany and Italy are also weighing on the euro. Concerns about a eurozone recession are also growing, so there is plenty to worry about. Additionally, there are some preliminary worries related to Greek elections on June 17. If anti-bailout candidates, who are opposed to austerity measures, win, there is a good chance that Greece could leave the eurozone.
With all of this news, and worries about China continuing in the background, it is no wonder that the euro’s recent gains were brief.
At 13:53 GMT EUR/USD is down to 1.2449 from the open at 1.2560. EUR/GBP is down to 0.8079 from the open at 0.8088.
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Ruble Goes Down with Crude Oil as Traders Cautious

The Russian ruble declined today as prices for crude oil, the main export of Russia, fell after Federal Reserve Chairman Ben Bernanke made traders cautious, mentioning threat to the US economy from fiscal tightening and Europe’s debt.
Brent grade of crude oil slumped as much as 1.6 percent to $98.34 per barrel. The yield on Russian bonds maturing in 2022 went up by two basis points to 4.071 percent. The warning from Bernanke made traders reluctant to risk and decreased appeal of emerging markets’ assets.
USD/RUB ticked up from 32.2750 to 32.6350 as of 9:46 GMT today.
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Mexican Peso Retreats as Bernanke Evaporates Optimism

The Mexican peso retreated today, after reaching the highest level in more than two weeks against the US dollar yesterday, as comments of the Federal Reserve Chairman Ben Bernanke muted optimism of Forex traders.
Bernanke warned about the negative impact of the crisis in Europe. He also mentioned a fiscal tightening, saying “a severe tightening of fiscal policy at the beginning of next year that is built into current law — the so-called fiscal cliff — would, if allowed to occur, pose a significant threat to the recovery”. Yesterday, the peso touched the highest level since May 22 versus the greenback. Mexico’s inflation accelerated to 3.85 percent in May from 3.41 percent in April.
USD/MXN rose from 14.0640 to 14.1690 as of 9:11 GMT today.
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Yen Falls as Traders Feel Less Need for Safety

The yen fell today, dropping for the fourth consecutive session, as China’s interest rate cut triggered speculations that the country is going to stimulate its economy. Forex traders felt optimism and left safer currencies in favor of higher-yielding ones.
The People’s Bank of China announced that it would lower the key one-year deposit rate and the one-year lending rate by 0.25 percentage point. There was good news from Europe as Jean-Claude Juncker, the leader of eurozone finance ministers, said that Spain would get aid. German Chancellor Angela Merkel stated that the nation is ready to use financial instruments to support the eurozone, but did not specify the nature of those instruments.
The yen may yet rebound in the near future as there was some bad news. Federal Reserve Chairman Ben Bernanke voiced concern that the crisis in Europe may hurt economic growth in the United States as well as in the rest of the world. Fitch ratings downgraded Spain’s credit rating to BBB from A with negative outlook.
USD/JPY climbed from 79.20 to 79.65 as of 19:35 GMT today, reaching the intraday high of 79.79, the highest since May 23. EUR/JPY was up from 99.66 to 100.28 and its daily maximum was at 100.62 — also the highest since May 23. GBP/JPY advanced from 122.71 to 123.81.
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Aussie Heads Higher on China Rate Cut

China announced, in a surprise decision, that it is cutting its interest rate. The announcement helped maintain risk appetite from yesterday, and provided a boost for the Australian dollar. Aussie is seeing gains today as a result of the Chinese policy decision.

One of Australia’s biggest export markets is China, and the Aussie has been struggling a bit as China’s economy slows more than expected. Today, though, China unexpectedly announced that it would cut rates in an effort to help stimulate the economy. With economic stimulus a reality, the Australian dollar is expected to do better on the Forex market. Also, other rate decisions are helping the situation, as Britain and the eurozone keep their rates on hold.
Indeed, Aussie is higher against its major counterparts. Risk appetite is also helping, as investors become a little more comfortable with riskier — higher yielding — assets. Australian dollar still has a relatively high rate, even after the recent RBA decision. So, for now, the Australian dollar is likely to continue to find some support, although things could easily change if bad news predominates in the next few days, or if Europe implodes. But, for now, the Aussie is likely to see success.
At 1:16 GMT AUD/USD is up to 0.9989 from the open at 0.9909. EUR/AUD is lower at 1.2616, down from the open at 1.2688. GBP/AUD is lower at 1.5597, down from the open at 1.5620.
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BOE Keeps Stimulus Plan on Hold; UK Pound Rises

The Bank of England kept its benchmark interest rate the same, as well as announced that it will not expand its quantitative easing plan at this time. The news served to help bring the UK pound higher against the US dollar and the euro today.

There is some speculation that the Bank of England will have to make more efforts at stimulus, at some point if the economy doesn’t pick up. However, it appears as though policymakers are reasonably pleased with the current state of things; at least, they are in no rush to make a move that will devalue the pound further.
As a result of the announcement that the asset repurchase program will remain the same, the UK pound is seeing a bit of a boost. There is help from risk appetite in general against the US dollar. Against the euro, the pound is still seen as something of a European safe haven, especially since there is speculation that the ECB might need to boost stimulus efforts for the 17-nation currency zone.
At 12:22 GMT GBP/USD is higher at 1.5588, up from the open at 1.5496. EUR/GBP is lower at 0.8080, down from the open at 0.8120. GBP/JPY is up to 124.0475 from the open at 122.7150.
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Euro Gains vs. Yen, Flat vs. Dollar

The euro gained today against the Japanese yen on positive results of a French debt auction and signs that the European Central Bank may take actions to battle the financial crisis. The currency was down against the US dollar.
France held an auction today, selling €7.84 billion of debt. Yesterday, the ECB held its main interest rate unchanged at 1.0 percent. Bank’s President Mario Draghi said at a press-conference after the policy decision:

We will monitor all developments closely and we will stand ready to act.

Such comments spurred hopes that the central bank will help eurozone countries with their debt problems. Yet today positive mood slowly wanes and the euro shows tendency to decline.
EUR/USD was down from 1.2582 to 1.2571 as of 10:55 GMT today. EUR/JPY traded at about 99.76 after it climbed from 99.66 to the daily maximum of 100.08.
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