British Pound the Only Currency to Rally against the Dollar (page 2 of 2)

There is still more room to fall before we get to 13 per cent, which is the biggest drawdown that the portfolio has seen over the 20 past years. The idea of long carry is breaking down and if the Asian markets finally follow suit, which they haven't in the past week that could be the trigger for further losses.

Last night's Japanese data was mixed. Labour cash earnings, overall household spending, and the PMI index all weakened, but the jobless rate and housing starts improved. With no more significant Japanese data on the calendar this week, the fate of the yen will continued to be determined by the movements in the Dow.

British pound the only currency to rally against the dollar

The British pound was the only currency to rally against the US dollar today thanks to the fact that the FTSE saw the biggest gain in 14 months.

The rally was triggered by strong earnings and rumours that the UK's seventh-largest bank could receive a buyout offer from the National Bank of Australia. Merger and acquisition flow has often come to the support of the currency therefore it is not a surprise to see it do so again.

Economic data released this morning was mixed. Consumer confidence deteriorated but even though the expectations portion of the CBI Industrial Trades survey dropped for August, the realised component of the report improved modestly.

In an environment where the economic outlook for the US is deteriorating quickly, the relative stability of the UK economy and the continual M&A flow will help the British pound outperform the US dollar.

Canadian dollar weakens despite record close in oil prices; Kiwi sells off as government warns of further losses

The Canadian dollar continued to sell-off today despite the fact that crude oil futures closed at a record high. Concerns about inventory and potential demand has weighed on the liquid commodity.

The lack of reaction in the Canadian dollar suggests that the market is far more concerned about the contagion affect of weaker US growth. GDP fell short of expectations in the month of May despite stronger retail sales.

Canadian companies are also beginning to report weaker earnings as a direct result of the strong loonie. Meanwhile the New Zealand dollar is down sharply after the foreign minister indicated that the currency has room to fall another 27 per cent. Whenever a price targets is given, the markets are never happy.

Australian retail sales is due for release tonight and they are expected to rebound sharply after the drop in May.

Euro sells off as investors flock to the safety of the dollar

A flight to safety has pushed the euro lower against the US dollar today. Economic data was mixed with German retail sales increasing less than expected on a monthly basis but more than expected on an annualised basis.

The number of people unemployed also dropped, which is promising. However there is not information to tell whether the European Central Bank will raise rates in September or October.