Daily Report: EUR/USD, GBP/USD, USD/JPY And USD/CHF : June 26, 2013

While many investors thought the U.S. Dollar would trade low on Tuesday, better than anticipated economic data changed their minds. Reports indicating that Consumer Confidence and Factory Orders went up prompted the greenback to rally against the majors. The U.S. monetary unit had started off weak after China indicated that it plans to maintain its money rates at “a reasonable level.” The currency advanced as a release confirmed that Consumer Confidence went up from 74.3 to 81.4, reaching close to a five-year high, suggesting that spending would likely increase as well. Furthermore, the Commerce Department stated that Durable Goods Orders rose 0.7 percent in May and Core Durable Goods Orders, which does not include items related to transportation, climbed 3.6 percent. The Department also showed that New Home Sales went up 2.1 percent while Home Values went up by 10.9 percent in March. Despite the fact that sales slowed down a bit, the figures were still better than forecast. Meanwhile, Gold Prices went down after the U.S. released solid data on Housing and Consumer Confidence and they dipped further as the U.S. reported better than predicted metrics on Durable Goods Orders.

In the Euro region, the shared currency was affected by comments issued by the European Central Bank’s President, Mario Draghi, who suggested that the region’s growth outlook still warrants the implementation of more stimulus. This came as a surprise to investors, given a recent hike in European yields and the uncertainty it brought on. Analysts believe that policy makers will continue to adhere to loose monetary policies. The Euro edged lower versus the greenback subsequent to the release of economic data out of the U.S. The British Pound also erased previous gains versus its U.S. counterpart after the U.S. reported better than forecast figures on Housing, Factory Orders and Sentiment among consumers.

The positive data out of the U.S. boosted the greenback against the Yen, while the Japanese currency slipped versus the British Pound and the Euro. The greenback had weakened against the Yen earlier in the day as officials from the Federal Reserve tried to downplay the possibility the central bank may reduce stimulus. Narayana Kocherlakota, President of the Federal Reserve Bank of Minneapolis, indicated that the bank will remain on the same path regarding monetary policy until the rate of Unemployment declines.

Lastly in the South Pacific, the Australian Dollar traded mixed but reached the highest level of volatility in close to 18 months as market investors wondered whether to opt for or shy away from high risk assets amid concerns over China’s credit crunch. The New Zealand Dollar remained almost unchanged against its U.S. peer as investors traded cautiously in light of the troubles brewing in China’s financial system.

EUR/USD- Comments Weigh On EUR
The Euro weakened against the U.S. Dollar as demand for the greenback increased following the release of better than forecast data and it continued to trade to the downside as further reports revealed that Consumer Confidence rose as Americans have become more optimistic about their economy. In the Euro-zone, ECB President Draghi suggested that the state of the economy warrants “accommodative monetary policies.” He explained that these will be necessary for as long as Unemployment remains high and Inflation continues to run low. Today, Germany will issue metrics on the Consumer Climate, a leading gauge for Consumer Spending.
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GBP/USD- BOE Comments On Growth
The British Pound rose against the U.S. Dollar as the President of the Federal Reserve Bank of Minneapolis, Narayana Kocherlakota tried to downplay the possibility that the central bank may cut back the monthly asset purchases. But the Sterling erased gains as the Bank of England’s policy makers suggested that the growth prospects for the country “remain modest” and the bank may consider expanding stimulus and lowering the benchmark interest rate. Charles Bean, the bank’s Deputy Governor, wrote a letter to the Treasury Departments in which he indicated that purchasing more assets would be sounder for bolstering growth than cutting the rates.
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XAU/USD- Futures Dip For A Second Day
Gold prices declined for a second consecutive day as the U.S. released better than expected economic data denoting growth, bolstering further speculation the Federal Reserve may put an early end to the quantitative easing program. Up until Monday, charts showed that the precious metal plunged 24 percent this year, as investors have lost faith in its value. Gold Futures for August delivery slipped another 0.2 percent and settled at $1,274.30 on the Comex Division of the New York Mercantile Exchange. According to the International Monetary Fund, countries like the Czech Republic and Mexico have reduced their gold holdings.
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USD/JPY- Greenback Rebounds On Fed Remarks
The U.S. Dollar rallied against the Yen as the U.S. issued better than forecast economic data. The greenback had continued to trade lower versus Japan’s currency following dovish comments by members of the Federal Reserve who suggested that the bank will continue with the current level of asset purchases until the employment sector shows great improvement. There were few comments out of Japan regarding the situation brewing in the financial system of China, but the market turned volatile as the People’s Bank of China failed to provide more liquidity.
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Today’s Outlook
Today’s economic calendar shows that the E.U. will report on the GfK German Consumer Climate. The U.S. will issue GDP, and the GDP Price Index. And New Zealand will announce the Trade Balance.