Daily Report: EUR/USD, GBP/USD, USD/CAD and AUD/USD

The U.S. Dollar rallied against the majority of its peers as reports indicating a slowdown in the Chinese economy increased demand for the safety of the greenback. The U.S. currency remained strong despite less than stellar data revealing a decline of 1.1 percent in housing starts for the month of February; however, builders broke ground for 698,000 new homes, thereby boosting building permits to 5.1 percent. According to economists, these metrics suggest that the U.S. housing sector still has a long way to go in order to recover. Meanwhile, the Canadian dollar dropped against its American counterpart as crude oil dipped 2.5 percent to $105.35 a barrel before it stabilized at $105.61.

Out of the Euro-zone, the shared currency weakened against the U.S. Dollar and the Pound on renewed fears over the region’s economy; the uncertainty was brought on when the German Federal Statistics Office announced that producer prices went up 0.4 percent since the month of January. The Euro remained under pressure as investors await the outcome of talks between Italy’s Prime Minister, Mario Monti, and union leaders who will address possible reforms for the country’s labor sector. The British Pound gained against most of its counterparts following the release of data showing that the inflation rate slowed down in the U.K. Economic reports out of Switzerland revealed that industrial production rose dramatically during the last quarter of 2011, thereby exceeding all forecasts.

The U.S. Dollar traded stronger against Japan’s Yen on concerns that China’s economy is slowing down. There was no economic news out of Japan as markets remained closed in observance of the Vernal Equinox.

Lastly, concerns over China’s growth outlook caused the Australian Dollar to decline for the first time in almost one week. Economists worry this may reduce demand for the exports of the South Pacific countries. The Aussie Dollar fell against the Yen after BHP Billiton Ltd., a large mining company, announced that China’s steel production has dropped. China’s Premier, Wen Jiabao, issued a statement indicating that the economic growth target is down from 8 percent.

EUR/USD- Euro Down On China Slowdown

The Euro weakened against the U.S. Dollar on indications that China’s economy is slowing down and as the U.S. reported on the housing sector, spurring demand for safety. The Euro was also weighed on by concerns over the region’s economic outlook after producer prices rose 0.4 percent and the Netherlands raised their 2013 budget deficit estimate to 4.5 percent of GDP. And in regards to the Greek saga, the IMF has said that the country may require more funding or another restructuring of its debt.
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GBP/USD- Pound Down On China’s Outlook

The British Pound declined against the U.S. Dollar on worries that the second largest economy in the world may be slowing down and as investors sought safe havens after the release of housing data in the U.S. On the economic front, the Confederation of British Industry announced that industrial order forecasts dropped more than anticipated in March, after it had reached a six-month high in February. However, the currency remained supported and gained versus most of its peers after reports showed that the annual rate of consumer price inflation dipped to the lowest level since November of 2010. This decreased the likelihood of further monetary easing by the Bank of England. Other news showed that consumer price inflation dropped to 3.4 percent as expected; and core CPI, which doesn’t take food or energy costs into account, dipped to 2.4 percent in February, the lowest it’s been since November of 2009. The Bank of England stated that inflation will drop below the 2 percent target by the end of this year.
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USD/CAD- Loonie Declines On Crude Prices

Canada’s Dollar declined against the greenback as crude oil, its biggest export, fell to $105.35 per barrel. The Loonie slipped from an almost six-month high versus the U.S. currency as demand for high-yield assets declined on speculations China’s economy may be slowing down. The Canadian Dollar also weakened against the Euro and the Swiss Franc after BHP Billiton Ltd. Announced that China’s steel production had dropped. This is the largest mining company, and China is its most important customer.
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AUD/USD- Commodity Demand May Hurt Aussie

The Australian Dollar declined on speculation that China’s growth outlook may hurt demand for commodities which would have a negative impact on the Australian economy. The Aussie currency pared gains later in the day after the Reserve Bank released the Minutes from the last monetary policy meeting. These showed that officials see fewer risks affecting the nation’s economy. However, the currency was undermined as the Minutes also revealed that policy makers may consider reducing interest rates if the economy slows down because of the crisis in the Euro region.
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Today’s Outlook

Today’s calendar shows that the U.K. will publish the Monetary Policy Meeting Minutes. Japan will report on the All Industries Activity Index and Trade Balance. Canada will release the Leading Indicators. New Zealand will announce its GDP. And the U.S. will issue data on Existing Home Sales.