Daily Report: EUR/USD, GBP/USD, USD/JPY And USD/CAD

The U.S. Dollar fell against the majority of its peers on the possibility that major global central banks may yet implement additional measures in order to bolster economic growth. Friday’s Payroll reports showed that U.S. employers added 163,000 jobs in July; however the Unemployment Rate ticked up from 8.2 to 8.3 percent, thereby increasing the likelihood that the Federal Reserve chairman would announce another round of quantitative easing when speaking at a conference set for the end of the month. Meanwhile, market investors await a number of speeches by the Fed chairman later this week. The Canadian Dollar rose to parity with its American counterpart after stocks and crude oil went up subsequent to a Friday release which confirmed that Payrolls in the U.S. climbed more than anticipated.

The Euro gained against the greenback for a second week as members of the German coalition headed by Chancellor Angela Merkel suggested they wouldn’t oppose the European Central Bank’s plan to purchase government bonds. Following this announcement, Spanish 10-year bond yields slipped below the 7 percent level. In the days to come, investors will pay close attention to developments in the Euro-zone, especially as the markets continue to digest the ECB’s most recent decision to refrain from increasing stimuli. Today, the Euro-zone will issue data on Consumer Confidence, which is seen as an indicator reflecting the health of the regional economy. The British Pound strengthened against the U.S. Dollar after robust employment data fueled appetite for risk assets. But gains were limited as market traders predict the Bank of England is getting ready to increase quantitative easing.

The Yen declined on Friday after better than forecast Non-Farm Payroll data fueled risk appetite. This took place despite disappointing news revealing that the Unemployment Rate climbed to 8.3 percent, calling into question the recovery of the job sector.

In the South Pacific, the Australia Dollar advanced versus the U.S. currency on the likelihood the Reserve Bank won’t reduce the already high interest rate. And the New Zealand Dollar rose for a third week versus the greenback as the S & P reaffirmed the nation’s credit rating, citing its “stable outlook” as a key factor.

EUR/USD- German Coalition Now On Board

The 17-nation currency rose at the end of last week after the U.S released better than expected Payroll figures. Optimism spread to the E.U. where stocks gained as risk appetite took over market sentiment. Even a report that Spain was close to requesting a full bailout didn’t upset the Euro’s advance. On the data front, metrics were better than forecast with Retail Sales dropping at a slower pace. Euro-zone Composite PMI increased from 46.4 to 46.5 and Service PMI climbed from 47.6 to 47.9. Spanish 2-year notes increased, though yields declined the most since December, on the possibility the ECB will purchase shorter maturity securities to help stem the turmoil in the bond markets. Furthermore, Spanish 10-year bond yields dipped below 7 percent.
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GBP/USD- BOE May Increase QE

The British Pound traded mixed at the end of last week and rose versus the U.S. Dollar following the release of better than predicted Payroll data out of the U.S. The Sterling failed to gain as much as the 17-nation currency, which was supported by risk appetite, as market investors were speculating that the Bank of England may be getting ready to increase quantitative easing. On the data front, Services PMI dropped to 51.0 in July when it was predicted it would rise to 51.6. In addition, Official Reserves remained at $528m.
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USD/JPY- Speculation On Further QE Declines

The Yen traded lower against the U.S. Dollar as better than forecast Non-Farm Payrolls showed that U.S. employers hired 163,000 more workers. On the data front, reports showed that Toyota’s sales forecasts placed the company ahead of GM and Volkswagen, reducing the likelihood the BOJ will implement further quantitative easing when it meets this week. Analysts believe the overvalued Yen failed to affect automobile sales.
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USD/CAD- Loonie Supported By Stocks And Oil

The Canadian Dollar rose to parity with its American counterpart as market sentiment was fueled by hopes the Euro-zone will come up with ways to manage the ongoing debt crisis. The Loonie was also supported by a hike in stocks and crude oil prices. The Canadian currency advanced versus the greenback despite the fact that the ECB failed to increase stimuli. It remained strong in anticipation of this week’s reports which are likely to show that the country’s employers added more jobs in July. Crude oil surged the most in one month after a release indicated that Service Industries grew at a fasterpace, fueling optimism about the economy in the U.S. Oil futures reached $91.40 a barrel in the New York Mercantile Exchange.
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Today’s Outlook

Today’s economic calendar shows that the U.K. will release the Halifax House Price Index. The E.U. will report on the Sentix Investor Confidence. In the U.S. Federal Reserve chairman Ben Bernanke is scheduled to deliver a speech. And New Zealand will publish the Labor Cost Index.