Dollar continues to slump on firming Chinese production data
The dollar slumped against some of the major currencies after the revelations made by the official and private sector data that the manufacturing sector in China may possibly be on a more firm footing than it was earlier, sparking the demand for higher yielding currencies.
On Friday the EUR/USD went up by 0.38% to 1.3036. Official sources in China revealed that the manufacturing purchasing managers’ index of the country has gone up to 50.60 for November from 50.20 in September, 2012. It is expected that China will stick with the domestic product growth of 7.5% increase in its target for 2013.
The expectations that the debt crisis in Europe may be tapering off has somewhat bolstered the euro against the dollar. In the meantime, the greenback was down against the Pound, with the GBP/USD trading up 0.20% at 1.6042. The dollar fell against the yen, with the USD/JPY trading down 0.08% at 82.41 and go lower against the Swiss franc, with the USD/CHF sliding 0.31% to 0.9250.
The performance of the U.S. dollar against the Aussie, New Zealand dollar and Canadian dollar was somewhat mixed with the AUD/USD down 0.13% at 1.0413, NZD/USD trading lower by 0.02% at 0.8200, and the USD/CAD falling 0.19% to 0.9923.
Euro gains after German approval of €44 Billion aid to Greece
Last Friday, the EUR rose 0.11% against the US Dollar and closed at 1.2986 after Germany approved €44 Billion ($56.9 billion) in aid to Greece. Germany is also considering writing off the Greek debt if Greece ceases borrowing and relies on its own revenue.
Moreover, the investor reaction was further boosted after the European Central Bank (ECB) declared that budgetary consolidation in the Euro Zone would have a temporary economic impact, but the Euro recovery is certain in the second half of 2013.
Japanese Yen remains weak
The USD/JPY rallied close to its peak point during trading late last week. This key Forex pair has extended gains earlier as the hope that the Bank of Japan (BOJ) may necessitate applying additional and hard line reduction measures which has brought about further yen selling pressure to the forefront. The recent report of the Commodity Futures Trading Commission exposed the fact that market participants and trading futures contracts, have augmented the net open yen short place by over 50%.
The greenback has gained strongly against the yen after the termination of parliament in Japan and the USD/JPY rate has increased over 3% on a monthly basis, the largest since February, 2012.
Crude oil remains steady
There was little change in crude oil futures from the last two weeks to today, as crude oil futures were little changed near the highest level in two weeks during European hours on Monday, as opinions remained mild after the release of positive Chinese manufacturing data. This is partly due to the fact about the uncertainty over whether the decisions of USA can prevent the fiscal cliff, which is a tax increase of $600 billion and spending cuts that will be triggered off automatically from January 1 next year unless the Republicans and Democrats consent on how to cut the deficit. The price of oil usually strengthens whenever the U.S. currency weakness as the dollar priced commodity becomes cheaper for other currency holders.