The euro and the pound fought themselves to a standstill, sterling hovering between €1.17 and €1.18 and ultimately going nowhere. An odd-lot of Euroland economic statistics brought something for everyone but nothing of any great importance. Lurking in the background, the German constitutional court is considering the legitimacy of the European Central Bank’s plan to support Euroland government bonds. A decision against the plan would hurt the euro.
The dollar was the worst performer among major currencies, losing a cent and three quarters to the pound. After initial enthusiasm that the Federal Reserve would soon begin to wind down its money-printing programme, reality has set in. There will be no sudden switching off of the money tap. Whilst that updated assessment has not done much to help the commodity and emerging market currencies, neither has it improved investors’ view of the dollar.
The Canadian dollar slid lower losing a cent to the pound. It is caught between the rock of association with the Greenback and the hard place of its status as a commodity and energy exporter. Last week it was the Loonie’s link to the US dollar that held it back, as investors began to realise that the Federal Reserve was not suddenly about to turn off the printing presses which continue to churn out $85bn a month.
After three weeks of losses the Aussie rebounded, rising a cent and a half against sterling. Down by 14% at the beginning of the week from its March highs, investors were running out of reasons to sell the Australian dollar. They came to the conclusion that the downward move had been over-extended and looked to take profits on speculative short positions. Investors took a similar view with the New Zealand dollar and the South African rand.
The NZ dollar was the second-best-performing major currency, strengthening by three and three quarter cents against the pound. Down by 12% at the beginning of the week from its March highs, investors were running out of reasons to sell the New Zealand dollar. They came to the conclusion that the downward move had been over-extended and looked to take profits on speculative short positions. Investors took a similar view with the Australian dollar and the South African rand.
Provided by Moneycorp