Dollar Climbs Before G-8 Meeting

After several days of losses, the greenback rebounded, ending the week with a rather neutral performance before a G-8 meeting, where Timothy Geithner may state in favor of a strong U.S. dollar.

The U. S. dollar pared its weekly losses after a Wall Street journal report affirming that the U.S. government will continue its policy to avoid bond purchases, resisting the pressure in order to control the supply of dollars. Another factor favoring the greenback is the incoming G-8 finance ministers meeting, in which speculations lead to believe that Treasury Secretary Timothy Geithner may suggest that a strong dollar is likely to be positive for a healthy world economic scenario. Comments in European financial organizations about the problems of a strong euro to exporters also helped the dollar to pair its weekly losses.

Analysts evaluate the speculations towards the G-8 meeting as a consequence of fundamental and technical factors moving the euro-dollar currency pair, as the market sentiment is not willing to push the euro to higher levels. A part from the problematic scenario the euro brings to the European agonizing exporting market, other factors such as the obscure future of the U.S. dollar as the main world currency make it hard to define in which direction the U.S. will point towards the next months.

South African Rand Post Gains as Emergent Markets Attractiveness Rise

The South African rand had a third consecutive day of positive performances as the global economic conditions are evidently improving, adding attractiveness to emergent market currencies.

The rand is one of the most volatile and influenced by the international world economic scenario among the most traded currencies, and a numbers of factors is helping the South African to climb since this April. Being one of the most liquid currencies available for trading, the South African rand is currently highly attractive, since interest rates in developed nations are rather low, and the economic recovery as its being perceived by traders decreased risk aversion in financial markets, adding to the already interesting profile of the rand. The current spiking oil price and this week’s U.S. reports added confidence to purchase currencies like the Brazilian Real and the South African rand, thanks to their high-yielding profile.

Analysts refer to the South African rand as a currency which is highly subjected to the international situation of the world economy. The richest African nation is a commodity exporter, without a high political influence internationally, being the domestic country’s conditions not so influential as the conditions in the United States for example. It is likely that the South African rand will remain strong as long as the investors continue their confident bullish pattern of asset purchasing.

USD/ZAR traded at 7.9808 as of 4:10 p.m. GMT this Thursday rising from a previous price of 8.1085. The rand already gained 19 percent against the dollar since the beggining of the year.

Canadian Dollar Falls as Crude Oil Price Declines

The loonie posted the sharpest fall in 4 days against all major currencies, interrupting a bullish trend as the price of crude oil stopped its rally, damping demand for the Canadian currency high-yielding profile.

The Canadian dollar had a day of negative performance after Bank of Canada Governor Mark Carney stated that a strong loonie may affect the Canadian economic, as exporters would lose competitiveness having less significant profit margins. The Bank of Canada may take measures to stop the national currency rally which has started since the demand for commodities improved in April, Carney also eased the expectations for a quick world economic recovery, in an attempt to control investors’ bullish sentiment towards the Canadian dollar. The loonie, among the main six traded currencies, posted the highest gains related to the commodities and stocks rally that were triggered by signs of an economic recovery coming firstly in Asia, followed by emergent markets and Europe.

It is natural that the Canadian dollar is losing strength, according to economists, the rally it witnessed was too sharp, and after Carney’s declarations together with a correction movement in the oil price, the loonie was totally unable to keep its bullish pattern. Even thought analysts are uncertain about Canada’s dollar future, it is well agreed that some factors will stop or at least ease its current strength.

USD/CAD closed the session at 1.1181 from Thursday’s rate of 1.1015, ending this week with a virtually neutral performance.

If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

FOREXYARD News Center

Dollar Up as Russia Sees No Other Alternative to the U.S. Currency

Monday, 15 Jun 2009

The EUR came under selling pressure against the greenback on Monday after the UK Daily Telegraph reported on its website that Germany's top industrial group has warned that Germany's credit crunch is deepening. The dollar also drew some support after Russia's Finance Minister said the nation has full confidence in the U.S. currency. His remarks came ahead of the first summit of leaders of Russia, China, India and Brazil on Tuesday, at which the leaders are expected to discuss issues including foreign reserve diversification.