The U.S. Dollar advanced the most in twenty-four weeks against a number of currencies after last week's releases indicated that the U.S. economy grew in the second quarter. And while the news issued on Friday showed that employers only added 209,000 jobs, rather than the predicted 230,000, the sector still saw the creation of employment for a sixth consecutive month. The data was disappointing, especially as the Unemployment Rate went up from 6.1 to 6.2 percent, prompting speculators to wonder whether the Federal Reserve would raise the interest rate earlier than forecast, and for the greenback to be stripped of its earnings. In the last week, the FOMC released is statement. It denoted that the monetary authorities want to see further signs of improvement in the employment sector before considering a rate hike. Other announcements published last week confirmed that the Gross Domestic Product recovered in the second quarter and the nation's economy grew 4 percent. In addition, Consumer Spending jumped 0.4 percent, the most in three months. With the release of the much anticipated Non-Farm Payrolls, and news that the level of Unemployment rose, Gold Prices jumped 0.94 percent. But gold still finished the month on a weak note and declined as the Federal Reserve stated that it will reduce monthly bond purchases by another $10 billion. In addition, gold dealers in Hong Kong have indicated that physical demand for the commodity has not risen. According to experts, demand for the metal from countries like China usually supports the commodity's prices. Futures for delivery in December traded at $1,294.8 a troy ounce on the New York Mercantile Exchange.
The Euro slumped against the U.S. currency after Markit Economics revealed an unexpected decline in Inflation, denoting that the Euro-zone's economy remains fragile. European Central Bank President, Mario Draghi, reduced the interest rate to the lowest level on record, but many E.U. leaders are skeptical about the effects of such strategy. Elsewhere in the Forex, the British Pound declined against the U.S. monetary unit as a string of economic reports suggested that the British economy may be cooling off. This week, the Bank of England will provide the policy decision; however the markets don't expect to see any changes at this time. The Yen rose against the greenback after the latest employment data out of the U.S. was rather disappointing. However, it remained low against the greenback and rallied against the Euro. Japanese data showed that the sales tax hike has helped Inflation stay above the central bank's target. The rate is expected to remain unchanged in the coming months. The Reserve Bank of Australia is scheduled to issue its rate decision this week. The Australian Dollar rebounded against the greenback as macroeconomic fundamentals out of China provided it with support. And the New Zealand Dollar retreated from a two-month low against its U.S. peer even though it has remained under pressure on comments by central bank governor, Graeme Wheeler, who stated that the Kiwi's value is "unjustified."
EUR/USD- Inflation Remains Source Of Concern The EUR/USD fell, but remained unchanged on Friday, even as market traders were concerned that newly announced sanctions against Moscow may hurt the Euro region's economy. According to sources, sanctions were levied against a number of Russian state-owned financial institutions, as well as against a ship manufacturer. The EUR/USD continued to weaken after the Consumer Price Index plummeted to 0.4 percent last month, when most economists predicted it would remain at the previously reported 0.5 percent in June. Germany's Consumer Price Index did not fare better. But the fact that the EUR/USD depreciated has not worried the markets. Most E.U. officials have hoped for the EUR to be debased by the recently implemented measures.
GBP/USD- No Rally In Over A Week The GBP/USD remained weak, and the pair has not sustained a rally in more than twelve days. Trading experts say that since July 1st, when the GBP/USD surpassed $1.7100, long positions have dropped. Analysts say that this is due to the fact that the recent releases of less than stellar reports have prompted the Bank of England to scale down its bullish tone. The central bank is scheduled to meet this week, but traders are not forecasting a rate change. However, further economic announcements on Industrial Production, and the index for Services are predicted to have a major effect on the currency. On the data front, last week's news showed that Manufacturing fell to 55.4 in July, from June's posting of 57.2. And Consumer Sentiment dipped from 1 to -2 in July.
AUD/USD- Aussie Supported By China The AUD/USD recouped, although its rebound was slight when compared to the major declines it sustained in the last two weeks. In the days ahead, the South Pacific nation will offer a bounty of economic fundamentals which may impact the pair's trend. Analysts expect that the U.S. currency may not be the catalyst which moves the markets in the week ahead. The Reserve Bank of Australia is scheduled to deliver the policy statement. Economists predict that the AUD/USD could be vulnerable to the release of data on Retail Sales and Employment. Meanwhile, the Chinese Manufacturing Purchasing Manager's gauge went from 51.0 to 51.7 last month, surpassing market forecasts, and benefitting the AUD/USD. Reports by the Commodities Futures Trading Commission showed that investors raised hawkish speculation over the AUD in the last week of July.
USD/JPY- Rebound Slowing Down The USD/JPY traded mixed and there's been a lack of trend consistency given recent fluctuations in market sentiment. Japan has issued a line-up of disappointing economic fundamentals, and this may be a factor that prompts the Bank of Japan to raise the level of stimulus. Policy makers believe that the country will weather the sales tax hike of April, but market traders are beginning to wonder whether this is true. This week, the Bank of Japan will issue its policy decision, while the country posts data on Trade Balance and other Leading Indicators.
