Daily Report: US Dollar Retreats Against The Yen

The U.S. Dollar retreated against the Yen and traded mixed against the majority of its most traded peers after economic reports showed an unexpected decline in U.S. Existing Home Sales. According to the National Association of Realtors, the sale of existing homes fell 0.6 percent in March to a seasonally adjusted 4.92 million units from a revised 4.95 million in February. The greenback came close to reaching a four-year high against the Yen after the group of 20 Finance Ministers and central bankers concluded that Japan’s monetary easing measures were aimed at ridding the country of deflation and were not meant as a means to devaluate the currency. The Canadian Dollar came close to trading at a six-week low versus its American peer, following the release of disappointing Homes Sales figures which fueled speculation Canada won’t be able to count on its biggest trading partner for help. On the flipside, the Loonie rallied against the currencies of Australia and New Zealand as investors were speculating that a recent drop in metal prices would not hurt Canada as much as it may hurt other commodity exporting nations.

The Euro slipped against the U.S. Dollar as the G-20 agreed to back Japan’s monetary policies, and as weak economic data out of the U.S. limited the greenback’s advance. Ongoing talk about the possibility the European Central Bank may cut the cost of borrowing money also weighed on the shared currency. The Euro rose early in the day after Italy announced the re-election of Giorgio Napolitano to the presidency. Mr. Napolitano, an 87-year old politician, indicated that he would attempt to end the political gridlock that has prompted the instability the country has experienced since its inconclusive elections. The Euro gapped higher as the Asian session begun, but the gap was quickly filled prompting the Euro to weaken against the greenback. The British Pound rallied against the Euro after three weeks of losses in anticipation of this week’s government releases which are anticipated to show that the U.K. has averted a triple-dip recession. The Sterling rose versus most of the majors on rumors the Chancellor of the Exchequer, George Osborne, will reveal another strategy aimed at bolstering credit for small businesses and individual consumers.

And while all eyes were on the USD/JPY, the Japanese currency climbed after it failed to drop to 100 per Dollar, as the U.S. reported lackluster Existing Homes Sales for last month. The currency was also supported by news that Japan obtained the green light to continue with its unprecedented easing measures. The news spurred the possibility the central bank may announce another bout of aggressive measures on April 26th.

Lastly, the Australian and New Zealand Dollars remained almost unchanged against the greenback as the outlook for global growth continued to weigh on investors.

EUR/USD- ECB May Cut Rates
The Euro started the week strongly against the U.S. Dollar but declined as market investors waited to obtain the results from a preliminary purchasing manager’s survey, which analysts believe could push the European Central Bank to lower the costs of borrowing money. According to Reuters, the index may show that the Euro region has done very little to jumpstart the faltering economy. However, policy makers have stated they’ll wait to see what future data shows. With the poor metrics out of China and U.S., speculators believe German exports will show declines. The shared currency dropped further versus the greenback as the group of Industrialized nations who met last week gave their support for Japan’s aggressive monetary measures, and bolstered speculations this will lead to Japan loosening policy even more. Today, the Euro region will issue data on Manufacturing and activities in the Services sector.
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GBP/USD- U.K. May Have Averted Recession
The British Pound was little changed against the greenback as investors worried over the global economic outlook; but it rebounded in anticipation of government reports expected to indicate that the U.K. averted a triple-dip recession in the last quarter. The Sterling’s gains were limited given the credit downgrade it sustained last week, and it remained under pressure after the International Monetary Fund suggested the British government ought to consider scaling back on its austerity measures. The British Pound gained momentum as someone familiar with what the Chancellor of the Exchequer plans to do next, stated that Mr. Osborne is going to unveil the Bank of England’s program for expanding lending to small businesses and individuals. This person did not wish to be identified as the plan hasn’t been officially released.
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USD/CAD- Loonie Drops On U.S. Data
Canada’s currency started the week trading range-bound as investors kept a close eye on the Yen after the group of 20 Finance Ministers and central bankers endorsed Japan’s unprecedented monetary policies. However, the Loonie declined to an almost six-week low versus its American counterpart as economic data revealed that U.S. Existing Home Sales declined 0.6 percent in March. The Canadian monetary unit remained low despite news that crude oil prices pushed higher after they fell 3 percent last week. According to sources, crude oil, the country’s biggest export, traded at $88.90 a barrel on the New York Mercantile Exchange.
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USD/JPY- Yen Came Close To 100 Per Dollar
The Yen rallied for the first time in a week after speculators failed to push the currency past the 100 per dollar level. The currency traded at this level 4 years ago. Japan’s monetary unit rebounded subsequent to a release which showed that Existing Homes Sales in the U.S. slipped last month, while economists anticipated home sales to increase 0.5 percent. The disappointing figures fueled further speculations the Federal Reserve will continue with the currency easing measures.
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Today’s Outlook
Today’s economic calendar shows that Switzerland will issue the Trade Balance. The Euro region will report on Manufacturing and Services PMI, French Manufacturing PMI and German Manufacturing PMI. The U.K. will release figures on CBI Industrial Trends Orders. Canada will announce Retail Sales and Core Retail Sales. The U.S. will publish New Home Sales. New Zealand will provide the Interest Rate Decision and the RBNZ Rate Statement. Lastly, Australia will issue CPI and the Trimmed Mean CPI.