The U.S. dollar traded mixed, but rallied against certain currencies like the yen and the Australian dollar, on speculation the central banks from those respective countries may intervene in the market, as is the case with the yen, or lower interest rates. The greenback advanced against the euro when it became evident that the eurozone’s chief Finance Ministers concluded their meeting without reaching an agreement on a package deal to help Greece reduce its debt.
The U.S. currency dipped after E.U. Finance Ministers announced that they would reconvene on November 26th. On the economic data front, Initial Jobless Claims declined as anticipated to a seasonally adjusted 410,000, while Unemployment Benefit Applications for the previous week were adjusted up to 451,000 after the Labor Department reported them at 439,000.
Other releases confirmed that the Michigan sentiment slipped to the 82 level while economists had been forecasting a drop to 84.5. The U.S. dollar sustained small gains against the Canadian currency as the markets began to wind down for the Thanksgiving Holiday in the U.S.
Euro region Finance Ministers concluded their meeting without reaching an agreement on how to help Greece reduce its debt. This prompted the euro to decline before it recouped on news that the Finance Ministers will meet again on November 26th. But market sentiment remained subdued as it was reported that talks between the International Monetary Fund and E.U. Ministers failed to unlock the bailout system.
Comments by German Chancellor Angela Merkel managed to spur some optimism after she suggested that chances for a deal are high. The euro surged against the yen following news that Japan’s Exports fell, a factor that dampened demand for the country’s assets. The British pound rallied to the highest price in one week against the euro just as E.U. Finance Ministers failed to conclude their meeting on a positive note.
The sterling was also boosted by indications that policy makers aren’t in favor of reducing the interest rates. The sterling climbed against the U.S. dollar after the Bank of England published the minutes from the recent Monetary Policy meeting. The minutes revealed that policy makers voted 8-1 against increasing the asset-purchasing program.
The yen plunged dramatically and continued on its downward trend after reports revealed that exports fell during the month of October, leaving the nation with a Trade Deficit 549 billion yen. Worse than anticipated news fueled a further sell-off of the currency, thereby increasing the possibility the next government may place more pressure on the central bank to print additional money. Furthermore, leader of the opposition party, Shinzo Abe, pledged to set a new inflation target of 2 percent, thereby increasing the yen’s sell-off.
Lastly, in the South Pacific, the Australian and New Zealand dollars slipped as risk appetite ebbed in the market on worries over whether Greece will receive its next bailout payment.
EUR/USD- Meeting Ends
The euro dropped to session lows against the U.S. dollar after talks between the IMF and the region’s Finance Ministers failed to unlock the bailout system in order for Greece to receive the next payment. However, the head of the Euro group, Jean-Claude Juncker, indicated that the Ministers were close to reaching a deal, a factor that raised optimism and boosted the shared currency. The euro failed to respond to the release of Employment figures out of the U.S., but it traded higher after it was announced that the Finance Ministers would meet again on the 26th.
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GBP/USD- BOE Votes 8-1
The British pound rallied against the U.S. dollar after the Bank of England released the minutes from the last Policy meeting. These showed that just one of the members voted to increase the asset purchasing program. On the data front, reports indicated that Government Borrowing declined more than anticipated. Public Finances dropped from -0.5 bn to -14.7 in October; Net Borrowing dipped from 9.9 bn to 6.5 bn although it slipped less than expected. According to analysts, the data supported the currency’s strength against other majors.
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USD/CAD- Exports Plunged
The yen plunged after worse than forecast data increased speculation the next government may opt for bolder monetary policies. On the data front, reports showed that Merchandise Trade Balance declined from -561 to 549 bn yen during the month of October. Merchandise Trade Exports slipped 6.5 percent, and Trade Imports dropped less rapidly than expected, from 4.1 to -1.6. The data caused the yen to weaken for a sixth consecutive day against the U.S. dollar.
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AUD/USD- Aussie Dips On Risk
Australia’s dollar declined after the Euro region’s Finance Ministers failed to come to a consensus on a debt-reduction program for Greece, thereby lowering demand for high-yield assets. The aussie was also weighed by news that Japan’s imports declined by 1.6 percent, a factor that dampened the outlook for the economies of the South Pacific countries. According to analysts, Greece remains at the center of the news, and therefore, anything that occurs in relation to Greece is likely to affect the high risk currencies like the Australian dollar.
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Today’s economic calendar shows that the markets in the U.S. are closed in observance of the Thanksgiving Day Holiday. The E.U. will report on Services and Manufacturing PMI. The U.K. will release data on CBI Industrial Trend Orders. Canada will issue Retail Sales and Core Retail Sales figures.