Euro Up as ECB Shifts Stimulus Program

The euro pared previous losses with a number of currencies this Thursday as the ECB affirmed that a series of measures used to stimulate the bloc’s economy on its way out of recession will be phased out, adding evidences that the economic health in the Eurozone is improving significantly.

The European Central Bank President Jean-Claude Trichet stated today that gradually stimulus measures used to dodge recession will be lifted towards the complete phasing out of these interventions, as Europe is showing a number of reports indicating better economic figures during the past months.

EUR/USD traded at 1.4877 as of 14:34 GMT after being traded at 1.4816 before these statements.

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Canadian Dollar Remain High Before Jobs Report

The Canadian dollar remained neutral at the highest level in more than a week before an employment rate which is due to be published tomorrow, defining the outlook for the loonie for the next week, since jobs figures are an important data to measure a country’s economic conditions.

An employment reports to be released tomorrow is giving a sense of expectation among traders to define the next movement trends for the loonie, since if the number of jobs improve, its liked that the loonie will find grounds to gain further, specially versus its U.S. counterpart.

USD/CAD traded at 1.0631 as of 15:06 being that virtually the same rate as in the intraday comparison.

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Canadian Dollar Down on Job Figures

After a lot of expectation regarding Canadian employment figures that were published today, the loonie fell drastically versus most of 16 main traded currencies and specially versus its U.S. counterpart, as negative job figures shunned investors away from assets in Canada.

The Canadian employment figures improved their numbers in the past two months before today’s report, that surprised traders and investors, and jobs were cut in Canada and the total unemployment rose from 8.4 to 8.6 percent in September, suggesting that Canada’s resilience from the recession is not as accurate as the market sentiment towards the North American nation suggested. The Canadian dollar has been posting negative weeks since the Bank of Canada affirmed the a strong rally for its currency would suffer interventions to protect exporters and assure Canada’s recovery from the downturn period which started last year.

The negative job figures combined with concerns regarding an eventual intervention coming from the central bank in Canada are strongly affecting the loonie’s performance in foreign-exchange markets as traders looking for high-yielding opportunities are giving up assets in Canada to bet in emergent markets and other commodity-linked currencies like the Australian dollar, leaving the loonie behind as its attractiveness declined substantially in the past few weeks.

USD/CAD traded at 1.0737 as of 13:37 GMT from a previous rate of 1.0624 yesterday. AUD/CAD traded at 0.9805 from 0.9677.

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Dollar Gains Slightly as Unemployment Rises

Risk appetite suffered a significant impact towards the end of this week’s session after both U.S. and Canada published grim employment figures, forcing investors to take more cautions positions and bet once again in the relative safety provided by

dollar-priced assets.

The U.S. dollar gained versus several currencies towards the end of this week session, and specially versus its Canadian counterpart as employment figures were published in both North American countries, indicating a surprising aggravation in unemployment in both U.S. and Canada, fact which raised risk aversion among North American traders, and to a lesser extent globally. Even if higher unemployment shift risk appetite levels among traders, the U.S. dollar is ending this week once again negatively versus the euro, after the European Central Bank affirmed yesterday that measures to stimulate the economy will be gradually phased out, creating speculations that the Eurozone economic health is considerably better than the North America’s current situation.

Unemployment is raising worldwide, and its almost a sure shot to expect negative reports regarding job figures every time data is published, according to some analysts. Even if these North America reports brought investors to safety, it was not enough to erase dollar losses this week, as investors still prefer to maintain their bets in higher-yielding markets.

USD/CAD traded at 1.0678 as of 14:55 GMT from a previous rate of 1.0626 in the intraday comparison

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Yen Gains on U.S. Job Losses

emand for safety rose towards the end of this week’s session as U.S. payrolls were cut beyond analysts expectations, suggesting that the economic recovery in North America will take longer than previously imagined by economists.

Both the United States and Canada surprised traders posting worse than expected unemployment figures, shifting confidence in markets and attracting traders towards the safety of the Japanese currency, making the yen to gain versus the Swiss Franc, emergent market currencies and higher-yielding options like the Australian dollar.

CHF/JPY traded at 88.36 as of 16:07 GMT from a previous rate of 89.25 in the intraday.

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South African Rand Top Weekly Currency on Gold Rise

The South African rand was the best performing among 16 main traded currencies in

foreign-exchange markets, as demand for metallic commodities exported from the African nation rose globally, increasing their rates and influencing positive the rand’s price and attractiveness.

This week gold and platinum, the biggest South African metal exports rose significantly as risk appetite reigned during most of the past five days, providing support for the rand to top the rank of best performers currencies, and causing the sharpest weekly rally in 3 months. Another positive point favoring the rand this week was a decline in foreign currency reserves growth, which could be interpreted as a neutral position from central bank policy makers regarding the current high levels of the rand. The South African rand is ranking among the top 5 best performing currencies in 2009, with other currencies from countries with similar profile as the South African nation, with high interest rates and a commodity export driven economy, such as the Australian dollar, and the Brazilian real.

Analysts affirm that the South African Reserve Bank position towards the rand’s strength is favorable for the currency to rally, as in other countries, like Canada, a strong currency is being highly unwelcome, which is affecting the Canadian dollar profile, differently from the rand, which still has a favorable scenario to grow further.

USD/ZAR closed the week at 7.54 after being traded to as high as 7.91 during the week.

Brazilian Real Gains Sharply on Risk Demand

The Brazilian real had one of the best weeks in more than 2 months as demand for commodities and emergent markets assets rose globally, maintaining the real as the best performing currency in 2009 among the 16 main traded ones in

foreign-exchange markets.

The real extended its gains this week flirting with the $1.70 level as risk appetite was strong during most of the previous 5 days, even if rising speculations that the national central bank will impose further measures to control the currency’s rally, following the implementation of a new tax for foreign capital invested in Brazilian stocks created last month.

USD/BRL closed the week 1.7193 from 1.7650 in the beginning of the week.

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