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Daily Report: EUR/USD, GBP/USD, AUD/USD And USD/JPY : June 24, 2014

Published 06/24/2014, 04:20 AM
Updated 09/16/2019, 09:25 AM

The U.S. Dollar depreciated against a number of currencies in the foreign exchange, including the Euro, despite lackluster metrics which pointed to a drop in activities in two major E.U. sectors. The greenback extended losses on Monday as economists predicted that the country’ Factory Production would post a slowdown, and New Homes Sales would only show a minor increase. The U.S. currency weakened against Japan’s monetary unit for the first time in three days on statements by the Federal Reserve’s Chairwoman, Janet Yellen, who confirmed that the central bank plans to maintain the benchmark interest rate at the current low for some time to come. And even though U.S. yields have gone up, the Dollar remained under pressure. Meanwhile, Gold prices hovered below the highest level in two months while speculators continued to assess the statements issued by the Federal Reserve’s Chairperson and the situation in Iraq. Economists believe that bullion is slated to sustain a back to back quarterly advance, perhaps the first in three years, as the growing tensions in Iraq and the Ukraine are bolstering demand for harbor assets. Futures for August delivery traded at $1,313.60 a troy ounce on the Comex during the morning hours on Monday.

In the Euro region, official reports on Manufacturing and Services output dropped, causing the Euro to slump against the U.S. Dollar. The numbers raised concerns that the economy of the Euro monetary bloc could be cooling off, while Mario Draghi, the President of the European Central Bank, reiterated the bank’s plan to leave the interest rate at the current low. The British Pound, which began its rally in the past week on the likelihood that the Bank of England could boost the key cash rate sooner than planned, extended gains and became the currency of choice for many market traders as well as for Hedge Funds. The Sterling rose to over a 5 year high versus the greenback and posted an advance versus the Euro.

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The Yen rose against the U.S. Dollar while the Japanese government awaits the cabinet to approve the proposed measures designed to help the economy expand. Furthermore, Japan posted better than anticipated metrics on Manufacturing, denoting growth.

Lastly, in the South Pacific, the Australian and New Zealand Dollar were fueled by stellar macroeconomic fundamentals out of China revealing a hike in Manufacturing activities, easing fears that the second largest economy is losing momentum.

EUR/USD- PMI Disappoints

The EUR/USD slumped as reports out of the region denoted the possibility that the economy in the Euro-zone could be stalling. According to the news, the region’s Composite Index of Manufacturing and Services Output touched a six-month low with a reading of 52.8 for June. Furthermore, the Manufacturing PMI slipped to 51.9 following May’s reading of 52.2, while analysts predicted there would be no changes. The area’s services PMI came in at 52.8, missing forecasts for a hike to 53.3. And Germany, the largest economy of the E.U. said that activities in the Manufacturing sector inched to the upside, although its Services PMI disappointed with two-month low readings. France continued to show that the sectors are in contraction territory, and in fact, the Manufacturing activities index plunged to the lowest level in six months, while Services went down to a four-month low.

EUR/USD
GBP/USD- Sterling Appeals To All

The GBP/USD surged the most since 2008 on speculations that the factors which prompted the pair to rise in the past week will contribute to further advances. The GBP/USS’s increase has encouraged traders to seek the pair over others, and economists says that this is because the U.K. won “the World Cup” for its economic policies. Weeks ago, Mark Carney, the governor of the Bank of England suggested that the central bank could decide to raise the borrowing costs, and this provoked market traders to anticipate that a rate hike could come about at the end of this year or in early 2015.

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GBP/USD
AUD/USD- Aussie Inches Up On China’s Announcement

The AUD/USD climbed to the highest rate in 2 ½ months after China announced that its Manufacturing sector moved onto expansion territory in June, with a reading of 50.8 for the HSBC Manufacturing PMI. Chinese authorities indicated that the expansion occurred as a result of the “mini-stimulus” programs now in effect. The news followed the implementation of a series of plans designed to bolster the sluggish economy. China reported that its Gross Domestic Product came in at 7.4 percent in the initial quarter of the year, showing a major slowdown.

AUD/USD
USD/JPY- Cabinet About to Issue Decision

The USD/JPY dropped as demand for harbor monetary units increased on news that the violence in Iraq has escalated. On the data front, Japan reported that Manufacturing PMI rose to 51.1, surpassing forecasts and indicating growth for the first time in almost three months. The release revealed that the PMI surged as a result of an increase in new orders. The lackluster news came from the employment sector which showed that payrolls fell for the first time in close to one year. Meanwhile, Japan awaits the government to approve a series of economic plans.

USD/JPY
Today’s Outlook

Today’s economic calendar shows that Switzerland will report on the Trade Balance. The U.K. will issue Mortgage Approvals. The U.S. will announced CB Consumer Confidence and New Home Sales. And Japan will release the CSPI.

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