Daily Report: EUR/USD, GBP/USD, EUR/JPY And AUD/USD : November 29, 2013

The U.S. Dollar traded to the upside and hit a six-month high against the Yen while advancing against the Euro, as the U.S. market was closed for the Thanksgiving Holiday. However, the greenback slumped against the South Pacific currencies and the Swiss Franc. As the Dollar began erasing some of its gains, Gold Prices rallied on Thursday even while trading remained subdued. Gold Futures for February delivery climbed 0.2 percent and reached $1,243.90 a troy ounce on the Comex Division of the New York Mercantile Exchange. February contracts dipped to $1,237.90 by end of day Wednesday.

Germany reported that its Inflation rate accelerated more than predicted this month, thereby reducing the possibility that the European Central Bank will ease up on its monetary policy. The Euro surged to a four-year high against the Yen following the announcement, and stayed strong as other releases showed that Consumer Prices in a number of German States rose for the first time in five months. The Bank of England’s governor, Mark Carney, stated that the bank’s Funding program will be available for businesses that apply for loans in 2014, but would not be available to individuals looking to purchase homes. Further comments suggesting that the U.K.’s economic recovery has gathered momentum helped bolster the British Pound to a 27-month high against the greenback. The Sterling was also supported by news revealing that House Price Inflation went up, although the central bank warned that this could derail the economic stability of the U.K., especially if home values continue to go up. The Swiss Franc gained versus the U.S. Dollar as metrics confirmed that Swiss Gross Domestic Product expanded 0.5 percent during the months from July to September.

The Yen spiraled to the downside versus the U.S. Dollar amid speculation that the Bank of Japan may expand stimulus in order to ensure the country reaches its 2 percent inflation target by April of 2015. The central bank is prepared to take any steps necessary to accomplish its goals, despite the fact that several of its board members doubt this can be achieved.

Lastly, in the South Pacific, the Australian and New Zealand Dollar rose against their U.S. counterpart on continued speculation that the Federal Reserve may begin trimming the monthly asset purchases by December. In Australia, domestic data showed that Capital Expenditures went up, while activities in the Manufacturing sector increased for the first time in two years. And in New Zealand, the Business Confidence Index posted close to a 15-year high, with a reading of 60.5 in November due to expectations that the retail sector will show expansion.

EUR/USD- German Data Fuels Euro
The Euro jumped to a one-month high against the greenback during thin holiday trading as the U.S. market was closed for the Thanksgiving Holiday. The Euro was bolstered by positive news out of the region’s biggest economy which showed that the German states of North-Rhine Westphalia and Saxony sustained growth for the first time in five months. In Saxony alone, Consumer Prices rose 1.4 percent this month. Furthermore, Germany announced that its annual rate of inflation accelerated from 1.2 to 1.3 percent. And on a month over month basis, prices climbed 0.2 percent. The metrics came in a day after Germany indicated that the number of individuals who are unemployed climbed by 10,000. The Euro remained strong on speculation that today’s economic releases will confirm that prices in the Euro-zone went up 0.8 percent.

GBP/USD- Sterling Hits 27-Month High
Despite the low volume of trading in the Forex market, the British Pound advanced to a 27-month high against the U.S. currency. This occurred after the Bank of England issued the Stability Report, indicating that the U.K.’s economic recovery is still on track and remains strong. The central bank suggested that several downside risks to the economy have dissipated; however, bank officials warned that a hike in interest rates could potentially derail stability. The Sterling rallied after the Bank of England confirmed that it would cut back on funding for home loans in an effort to prevent the possibility of a real estate bubble.

EUR/JPY- ECB May Not Ease Policy
The Yen slipped to a four-year low against the Euro after Germany released solid macroeconomic numbers which denoted that the rate of inflation sped up, a factor that contributed to a drop in speculation that the European Central Bank may taper its monetary policy. The Yen was also weighed down by comments from Sayuri Shirai, a Bank of Japan board member, who voiced concerns over the possibility that the country may not reach its 2 percent inflation target due to the many downside risks which could dampen growth.

AUD/USD- Aussie Rallies On Expenditures
The Australian Dollar climbed after official reports showed that Capital Expenditures in the private sector rose 3.6 percent during the third quarter, beating out forecasts for a 1.2 percent drop, and after the second quarter revealed a 1.6 percent increase. In addition, New Home Sales fell 3.8 percent last month, which had little impact on the Aussie. However, market traders are speculating that the Australian Dollar will weaken and perhaps decline the most in five years as policy makers hinted at the possibility of an intervention.

Today’s Outlook
Today’s economic calendar shows that the U.S. market will close at 1:00 pm due to the Thanksgiving Holiday. Japan will report on Construction Orders and Housing Starts. The E.U. will issue data on German Retail Sales, CPI, Core CPI and the Unemployment Rate. The U.K. will publish Mortgage Approvals and Lending.