Why Did EUR/JPY Hit a Record High? (page 2 of 2)

This has happened more than seven times over the past 20 years and each time the US manufacturing sector contracted, EUR/JPY rallied. On average, from the month that ISM contracted to the month that ISM moved back above 50, EUR/JPY rallied 314 pips.

Euro edges higher on hawkish comments and Dollar weakness

The Euro edged higher today on US dollar weakness and hawkish ECB comments.

Draghi is the latest ECB member to warn that surging oil has increased inflation risks.

Central bank officials are not giving up on their hawkish monetary policy even though growth is clearly slowing.

The German IFO report is the marquee event on the Eurozone calendar this week.

With Eurozone industrial production falling by the largest amount in a single month since 1992, it is hard to believe that German business confidence improved.

Meanwhile Swiss economic data was slightly better than expected with producer prices beating expectations and the real estate index of family homes edging higher.

The Swiss trade balance is due for release tomorrow. The market expects weaker global growth to weigh on export demand.

BoE comments weigh on the British Pound

Even though the British pound strengthened against the US dollar, the rally was modest at best compared to the performance of the other major currencies.

Aside from the US dollar, the pound weakened against all of the other G10 currencies as the outlook for the UK economy deteriorates.

Bank of England member Blanchflower confirmed what many Britons fear the most, which is that the UK economy is headed for a recession.

Although Blanchflower is typically more dovish than his counterparts, he is right in arguing that the economy will get worse before it gets better.

He calls for the central bank to cut interest rates rapidly to prevent a downturn that could be more severe than the one in the US.

The Bank of England minutes are due for release on Wednesday.

Canadian Dollar rallies ahead of retail sales

The Canadian dollar has strengthened ahead of its retail sales report tomorrow.

The strong rise in wholesale sales suggests that consumer spending should have been strong. The recovery in oil prices is also helping.

The New Zealand dollar was the only the currency to lose value against the greenback today. The overriding fear in the markets right now is that the Reserve Bank will make dovish comments following their monetary policy meeting this week.

Visitor arrivals and credit card spending was weak in June, pointing to weaker consumer spending last month.

The Australian dollar on the other hand edged higher as stronger vehicle sales offset softer producer prices.