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US$ Falls 1.5% Against Swiss Franc

The U.S. dollar traded in largely flat ranges against the majority of it counterparts even as global equities continue their rebound.  However, the U.S. dollar fell dramatically versus the Swiss Franc as the Swiss National Bank refrained from announcing any new steps to curb the franc’s gains.  The SNB tends to announce measures to weaken the franc on Wednesday mornings.  The Swiss government said on Aug 3. it welcomed measures to curb the franc gains, while the central bank boosted supplies of the currency on Aug 10. to erode its value.  Finance Minister Eveline Widmer-Schlumpf also said Aug. 17 that she supported “any” measure deemed appropriate by the central bank, including a possible currency peg.  Market participants had priced in some sort of intervention or verbal rhetoric against the franc strength, but the failure of anything to materialize has pushed the franc stronger.  Meanwhile, the U.S. economic docket showed that private companies in the U.S. added 91K workers to payrolls in August, according to data from ADP Employer Services.  The median forecast of economists surveyed by Bloomberg News called for an advance of 100K.  Non-farm payrolls and the unemployment rate will be released on Friday.

The Euro held a tight range against the U.S. dollar but weakened against most of its peers as data showed euro-region unemployment held at 10.0% in July, the European Union’s statistics office in Luxembourg said in a statement today.  At 21.2%, Spain had the highest jobless rate.  European inflation remained at 2.5% in August, above the central bank’s 2.0% target.  ECB President Jean-Claude Trichet said earlier this week the bank is reviewing its assessment of inflation risks as economic growth in the region slows.  The comments prompted bets that the central bank will cease raising its benchmark interest rate, following two increases this year to 1.5%.

The Japanese yen pushed modestly higher against its rivals as poor economic data from Europe to the United States bolstered demand for the safe-haven currency.  The Japanese economic docket showed that the rebound in Japan’s industrial production after the March 11 earthquake may be coming to an end, making the nation’s recovery even more dependent on overseas demand.  Factory output increased a less-than-expected 0.6% in July from June, the slowest gain since March. 

The British pound is unchanged against the greenback but traded close to a three week low against the Euro after a report showed U.K. consumer sentiment fell in August, adding to signs the economic recovery is faltering.  The London-based research group GfK NOP Ltd said an index of consumer sentiment slipped 1 point to minus 31 in July.   Business confidence in the economic outlook also slumped this month to the lowest since 2009, Lloyds Bank reported yesterday.  Market participants will now shift their focus to housing data tomorrow.  The Nationwide Building Society will say tomorrow that house prices stagnated this month, after increasing 0.2% in July, according to a median estimate of economists. 

US$ Gains On Speculation ECB Done Raising Rates

The U.S. dollar rallied against the majority of its counterparts as European stocks and U.S. equity futures declined and ahead of data that is expected to show home prices and consumer confidence fell in the U.S., spurring demand for safer assets.  The dollar snapped its recent slide versus the Euro on speculation the European Central Bank will not increase its benchmark interest rate any more this year.  The greenback gained the most versus Sweden’s Krona after Swedish retail sales unexpectedly fell in July, adding to pressure on the central bank to abandon signaled interest rate increases.  This morning the S&P/Case Shiller index is expected to show the value of homes in 20 U.S. cities fell 4.6% from June 2010, the biggest 12-month decrease since November 2009.  Later a separate report will show consumer confidence fell to a 10-month low in August.  This afternoon, the Fed is scheduled to release the minutes of its August 9^th meeting, after policy makers pledged at the session to keep interest rates at a record low through the middle of 2013.

The Euro weakened across the board on speculation the European Central Bank has finished raising interest rates as the region’s sovereign debt crisis curbs economic growth.  Indeed, ECB President Jean Claude Trichet said late yesterday the bank is reviewing its assessment of inflation risks.  “Risks to the medium-term outlook for price developments are under study in the context of the ECB staff projections that will be released early September”, Trichet said in Brussels.  The comment contrasts with his more recent policy statement on August 4^th, when he said risks to inflation outlook were “on the upside.”  The euro-region’s central bank has raised its benchmark interest rate twice this year t o 1.5% to curb above target inflation.  The Euro extended losses after the European Commission said an index of executive and consumer sentiment in the single-currency region fell to 98.3 in August from a revised 103 in July.  That is the lowest reading since May 2010. 

The Japanese yen advanced versus most of its rivals as stocks stumbled, boosting demand for the safe-haven currency.  However, Japan’s jobless rate rose for a second month and retail sales dropped, underscoring the challenge for incoming Prime Minster Yoshihiko Noda in securing Japan’s recovery from the March 11^th earthquake.  The unemployment rate rose to 4.7% in July as payrolls fell 40K from a month earlier.  Retails sales slid a seasonally adjusted 0.3% from June, a Trade Ministry report showed.  Noda, who was elected premier by the lower house of parliament today, inherits a recovery under threat from an advancing yen and a global slowdown.

The British pound fell a day after being closed for a holiday despite rising U.K. stocks following a slew of poor economic data.  British lenders granted 49,239 loans to buy homes, the Bank of England said today.  The reading is less than half the monthly average of 103,000 in the decade to 2007, before the financial crisis.  An index of British companies optimism about the economy compared with three months earlier dropped to minus 3 from 19 in July, a unit of Lloyds Banking Group Plc. said today.  The print marked the lowest reading since March 2009. 

US$ Holds Losses as Stocks Rise

The U.S. dollar continued to trend lower against the majority of its counterparts as global stocks advanced on speculation the world will avoid a return to recession, reducing demand for a haven.  Indeed, European and Asian equities are over 1.0% today and U.S. stock futures foreshadow a higher open for American shares. The dollar fell on Friday after Federal Reserve Ben S. Bernanke said in Jackson Hole, Wyoming that the U.S. economy isn’t weak enough to warrant immediate additional fiscal stimulus.  While Bernanke said the Fed still has tools to aid the recovery if needed, he stopped short of indicating that the central bank will move ahead with a third round of government bond-buying.  The Swiss frank fell against all its rivals on speculation Swiss policy makers will introduce new measures to cap the currency’s gains and local banks may start charging customers for franc deposits.  Meanwhile, the U.S. economic docket showed that consumer spending climbed more than forecast in July.  Purchases rose 0.8%, the biggest gain since February, after a 0.1% decline the prior month, Commerce Department figures showed today.  Consumer spending accounts for about 70.0% of the U.S. economy.  Tomorrow sees the release of the S&P Case-Shiller Home price index, consumer confidence and the Federal Reserve meeting minutes, followed by ADP Employment data, Chicago PMI and Factory orders on Wednesday.  Weekly jobless claims and ISM manufacturing data is expected Thursday morning, while Non-farm payrolls and the unemployment rate will round out the week on Friday. 

The Euro traded to recent highs versus the U.S. dollar as “risk on” trading continues to push stocks higher and boost demand for the higher-yielding currency. However, the euro pared gains after inflation data in several German states slowed in August as seasonal food and energy prices fell.  The inflation rate decreased to 2.2% from 2.3% in Bavaria and to 2.3% from 2.7% in North Rhine-Westphalia.  The rates in Hesse, Saxony and Bradenburg also eased.   With a light economic docket, expect the EUR/USD currency pair to continue to ebb and flow with the prevailing risk appetite. 

The Japanese yen weakened against the Euro and British pound while holding flat against the U.S. dollar as soaring global stocks weighed on the safe-haven currency.  The yen was also under pressure as Japanese Finance Minister Yoshihiko Noda, who has overseen three currency-market interventions in the past year, was chosen to succeed Prime Minister Naoto Kan.  Noda was elected head of the ruling Democratic Party of Japan, paving the way for the 54-year old finance minister to become the third premier since the party took power two years ago.  The DPJ is set to use its majority in the lower house to appoint him as prime minister as soon as tomorrow. 

The British pound held a tight range against the U.S. dollar as all markets in the U.K. are closed for a holiday.  The U.K. economic docket remains light this week with the only data points of note starting on Tuesday with the August GfK consumer confidence survey followed by nationwide house prices on Thursday. Consumer confidence is expected to deteriorate to its lowest read since February of 2009 with estimates calling for a print of -33, down from a previous read of -30. House price data is expected to be mixed with the year on year prices seen growing 0.4% from a previous decline of 0.4%. 

US$ In Limbo Ahead of Bernanke Speech

The U.S. dollar weakened modestly against most of its major counterparts ahead of the Federal Reserve’s conference in Jackson Hole, WY and before economic data that was expected to show that U.S. growth slowed.  Fed President Bernanke will be speaking at the conference later today.  While many analysts believe that Bernanke will not introduce any immediate stimulus, some have speculated that he will acknowledge that the Fed is ready to act.  If he conveys that there is no way the Fed will allow the U.S. economy to deteriorate, and that they will use all policy tools at their disposal, stocks will likely rise and the U.S. dollar will become under renewed pressure.  However, should Bernanke refrain from indicating future bond purchases, the dollar could rally as the market would see it as a commitment to avoiding currency debasement.  Meanwhile, the economic docket showed that the U.S. economy grew less than previously estimated in the second quarter, capping the weakest six months of the recovery that began in mid 2009.  Gross domestic product climbed at a 1.0% annual rate from April through June, down from a 1.3% prior estimate revised Commerce Department figures showed today.  The print failed to meet a median forecast for a 1.1% increase. 

The Euro pushed higher against the U.S. dollar on general dollar weakness. Indeed, the higher-yielding currency gained on its American counterpart even as global equities slumped.  The Stoxx Europe 600 Index lost 1.6% and Germany’s DAX Index slid 2.6%.  There was no major economic data released in the Euro-zone today, so the EUR/USD exchange rate will likely take its cues from comments from U.S. Fed President Ben Bernanke.  Bernanke is scheduled to start his speech at 10 a.m. New York time.  His hint of asset purchases, or quantitative easing, during the same event last year spurred an eight-month advance in the S&P 500 Index and a rally for the Euro versus the greenback.

The Japanese yen advanced for the first time in three days versus the U.S. dollar as Prime Minister Naoto Kan said he was stepping down after parliament passed the final two pieces of his legislative agenda.  “I feel I’ve done everything I could under these difficult conditions,” Kan told Democratic Party of Japan lawmakers at a nationally televised meeting today in Tokyo.  In addition, Japan’s government will outline measures to help the nation cope with a stronger currency on August 29^th, the Nikkei newspaper reported, without citing where it obtained the information. 

The British pound held a tight range against the U.S. dollar but fell to its weakest level in two weeks against the Euro as data showed U.K. economic growth slowed and manufacturing shrank, strengthening the case for interest rates to stay at a record low.  Gross domestic product rose 0.2% in the second quarter, the Office for National Statistics said today in London.  Manufacturing fell 0.5%.  Total industrial product, which includes mining and utilities’ output, dropped 1.6%, the biggest contraction since the first quarter of 2009.  The weak data comes a day after a report that showed consumer confidence dropped in July, fueling concern the economic recovery is faltering. 

US$ Under Pressure Amid QE3 Speculation

The U.S. dollar held relatively tight ranges overnight but still continued to slide against its major peers as investors increased speculation that the Federal Reserve Chairman Ben S. Bernanke will announce further monetary stimulus for the economy tomorrow.  Bernanke told Congress in July that the Fed’s options to bolster the economy include extending the average maturity of its bond holdings and cutting the interest rate on excess reserves, as well as buying more debt and keeping rates at a record low.  However, if the Fed disappoints markets and fails to show a willingness to embark on a third round of so-called quantitative easing, or QE3, higher-yielding assets such as stocks will likely falter and push the U.S. dollar higher. Meanwhile, claims for U.S. unemployment benefits unexpectedly rose last week, likely pushed up for a second time by a labor dispute at Verizon Communications Inc. Jobless claims climbed by 5K to 417K, Labor Department figures showed today.  At least 8,500K applications were filed by workers at Verizon last week.  The data has failed to affect the direction of the U.S. dollar this morning and with no more data slated for release today expect tight ranges ahead of the Fed conference tomorrow in Jackson Hole, WY. 

The Euro continues to trade near recent highs against the greenback as increased speculation for additional monetary stimulus in the U.S. bolstered global equity indexes.  Indeed, the Stoxx Europe 600 Index rose as much as 1.1%, following a 0.6% rise in Asia’s benchmark MSCI Asia Pacific Index.  However, the Euro may come under modest pressure early next week as the Germany-based market research company GfK SE is forecasting its consumer sentiment index will decline for a sixth month in September amid household concerns that the economy is slowing.  That data will follow data this week that showed business confidence in Europe’s biggest economy was at the lowest in more than a year and investor sentiment slid the most in five years. 

The Japanese yen continued to push lower a day after Japanese Finance Minister Yoshihiko Noda announced yesterday a $100 billion funding program intended to encourage the exchange of “yen-denominated funds to foreign currencies.”  The plan isn’t likely to have a strong impact on the yen as it doesn’t outline coordinated action with the Bank of Japan in monetary easing or further intervention, according to a Barclays Bank Plc research note. 

The British pound was mostly unchanged against the U.S. dollar but fell to its lowest level in more than two weeks against the Euro as a report showed U.K. consumer confidence dropped in July, fueling concern the economic recovery is faltering.  Nationwide Building Society said its index of sentiment declined 2 points to 19 from June, the lowest reading since April.  A gauge of consumers’ expectations for the economy in the next six months slipped 3 points to 67.  At the same time, Policy maker Martin Weale said he abandoned his call for an interest rate increase this month because the outlook weakened amid the risk of contagion from events in Europe and the U.S.

US$ Holds Largely Flat Ranges

The U.S. dollar traded in a quiet range overnight against most of its major rivals even as global equities ticked lower and American futures foreshadow a weaker open for U.S. shares.  The dollar continued to lose against the Swiss Franc as the currency continues to be the safe-haven of choice for investors.  The Australian and New Zealand dollar fell against all of its counterparts as retreating stocks and lower commodity prices reduced demand for the two higher-yielding currencies.  The U.S. dollar continues to remain under overall pressure on speculation Federal Reserve Chairman Ben S. Bernanke may signal additional steps this week that may debase the currency.  However, if the Fed does not indicate further bond purchases at the conclusion of their summit in Wyoming this weekend, the U.S. dollar could see a modest rebound.  Meanwhile, the economic docket showed orders for U.S. durable goods climbed more than forecast in July.  Bookings for goods meant to last at least three years rose 4.0%, the most in four months, after failing a revised 1.3% in June, the Commerce Department reported today.

The Euro traded in sideways ranges versus the U.S. dollar as falling stocks and general dollar weakness over possible further U.S. monetary stimulus pulled the currency in opposite directions.  The Euro fell against the Swiss Franc after German business confidence fell to the lowest level in more than a year as a global slowdown and Europe’s debt crisis dampened the outlook for economic growth.  The Ifo Institute in Munich said its business climate index, a measure of German business confidence based on a survey of 7,000 executives, dropped to 108.7 in August from 112.9 in the prior month.  The print marked the lowest reading since June 2010. 

The Japanese yen rose towards postwar highs against the dollar as Finance Minister Yoshihiko Noda announced a $100 billion effort to help business cope with gains in the currency, reducing speculation Japan will intervene to curb gains.  The government will release foreign-exchange reserves to the state-run Japan Bank for International Cooperation for funding to aid exporters to spur purchases overseas, Noda said.  The announcement came hours after Moody’s Investors Service lowered the nation’s debt rating one step to Aa3, with a stable outlook

The British pound slid slightly overnight but remains near recent highs versus the U.S. dollar even as global equities decline.  With little risk events on the docket in the U.K. this week, the direction of the pound and the dollar will likely take its cues from comments from the Fed on Friday at a conference in Wyoming.  Last year, Chairman Bernanke’s speech at Jackson Hole marked a critical turning point as he first floated the idea of a second round of quantitative easing, sparking a sell off for the U.S. dollar. 

US$ Under Pressure Amid QE3 Speculation

The U.S. dollar weakened against the majority of its rivals after reports showed manufacturing from China to Europe exceeded forecasts, reducing demand for safer assets.  A preliminary gauge of Chinese manufacturing in August was 49.8 according to a reading of the Purchasing Managers’ Index today.  The print bettered the “rumored” number of 45 and provided relief to Asian stock markets.  European stocks and American futures also ticked higher, weighing on the greenback.  The U.S. dollar may remain under pressure over the next few days as speculation rises the Federal Reserve will announce this week further monetary stimulus to bolster the U.S. economy.  However, if Fed President Ben Bernanke does not signal further bond purchase, the greenback could see modest strength at the end of the week.  Later this morning, new home sales on a month over month basis are expected to fall 0.6% in July after falling 1.0% in the month prior. 

The Euro strengthened for a third straight day against the U.S. dollar after gauges of German and Euro-area manufacturing beat estimates.  Germany’s manufacturing purchasing managers’ index was 52 in August, exceeding forecasts of 50.6 in a Bloomberg survey.  A composite index of euro-area purchasing managers in services and manufacturing also modestly exceeded expectations.  The strong data sent European stocks over 1.0% higher and boosted demand for other higher-yielding assets such as the Euro.  However, gains in the euro were tempered after an industry report showed German investor confidence slumped in August.  The ZEW Center for European Economic Research said its index of investor and analyst expectations fell to minus 37.6 from 15.1 in July. 

The Japanese yen pushed higher against the U.S. dollar but fell against its other counterparts as strong global economic data and rallying stock indexes weighed on the safe-haven currency.  Once again Finance Minister Noda said recent gains in the yen may hurt the nation’s economy, further fueling speculation officials will act to curb its appreciation.  Prime Minister Naoto Kan told his cabinet today that he will resign after the passage of legislation including a deficit-covering bond bill, Kyodo News reported.  Kan said a new prime minister will probably be decided on August 30^th.

The British pound climbed versus the U.S. dollar as positive economic data and higher stocks increased demand for the Sterling.  The number of July mortgages granted to British homebuyers to purchase property climbed 33,417 from 31,747 in June, the British Bankers’ Association said today.  Also, a U.K. index of factory orders rose from a three month low in August and consumer-goods manufacturers predict a “strong rise” in output in the next quarter, the Confederation of British Industry said today.  Britain’s benchmark stock index, the FTSE 100, jumped 1.3%, extending yesterday’s 1.1% advance. 

US$ Rallies Versus Swiss Franc, Flat Against Other Majors

The U.S. dollar traded in relatively quiet ranges overnight, holding steady versus the Euro and the British pound as traders brace for what is expected to be another roller coaster day in global markets.  Indeed, American stocks lost nearly 6.0% on Monday, only to recover 4.0% the next day after the Fed pledged to keep lending rates at an all-time low through at least the middle of 2013.  However, as fears of slowing U.S. growth and possible downgrades to France sent stocks 5.0% lower yesterday.  Dow Industrial futures show American stocks are expected to open another 100 points lower.  The U.S. dollar did rally against the Swiss Franc after Swiss National Bank Vice President Thomas Jordan said a temporary peg to the euro would be legal as policy makers try to stem the currency’s gains.  “Any temporary measures to influence the exchange rate are permissible under our mandate as long as these are consistent with long-term price stability,” Jordan said.  The Swiss currency has rallied to records against the Euro and the dollar earlier this week as Europe’s sovereign debt crisis and U.S. economic weakness spurred refuge demand.  Meanwhile, the U.S. economic docket showed that claims for unemployment insurance payments unexpectedly fell last week to a four-month low.  Applications for jobless benefits decreased 7K to 395K, the fewest since early April.  

The Euro fell to the lowest level since mid-July versus the U.S. dollar as global risk aversion kept downward pressure on the higher-yielding common currency.  The Stoxx Europe 600 Index is currently down over 1.0%, erasing earlier gains as financial stocks continue to tumble.  Indeed, Societe Generale SA, France’s second-largest bank, fell 8.2% today after falling 15.0% yesterday. The Euro was also under pressure overnight on rumors that France would be the next AAA rated economy to have its public debt downgraded.  The European Commission has rejected the rumor.

The Japanese yen maintained is bullish direction versus the U.S. dollar, approaching its post-World War II high versus the greenback.  Global economic uncertainty has led investors into the yen, but the gains may be short-lived as investors increase their bets the Bank of Japan will once again intervene in currency markets.  The intervention earlier this month, which Japan may have spent a record amount, was Japan’s third after six years of a hands-off approach. 

The British pound remained near a three-week low versus the U.S. dollar as Britain continues to suffer from its worst riots in 30 years.  Chancellor of the Exchequer George Osborne is expected to address parliament this morning at a special meeting called after riots, looting and arson in the capital spread to other cities this week.  Osborne is expected to defend the steepest government spending cuts since World War II as Europe’s debt crisis deepens.  Prime Minister David Cameron is facing pressure to review his policy of cutting spending on the police following the civil unrest.  Opposition politicians may seek to take advantage of a Bank of England warning yesterday that the economic outlook is worsening as they call for a roll back of austerity measures.  Economic and political uncertainty will likely weigh on the strength of the sterling throughout the rest of the week.

US$ Poised to Gain as Stock Futures Point Lower

The U.S. dollar traded in a mixed direction overnight, modestly gaining against the majority of its counterparts but continuing to lose ground versus the safe-haven Japanese yen.  The greenback was largely unchanged versus the Euro and British pound a day after the U.S. fed pledged to keep its benchmark interest rate at a record low at least through mid-2013 to revive a recovery that’s “considerably slower” than anticipated.  The U.S. central bank is “prepared to employ additional tools to bolster an economy hobbled by weak hiring and anemic household spending, it said in a statement.  The Swiss franc fell against all of its counterparts after the nation’s central bank said it expanded measures to fight the currency’s “massive overvaluation.”  The Swiss National Bank said it will “significantly increase” the supply of liquidity to the money market and expand banks’ sight deposits.  The SNB will also conduct foreign-exchange swap transactions as it attempts to curb gains in the Swiss currency caused by investors seeking a haven from the European debt crisis.  Nevertheless, the greenback continues to trade near all-time lows versus the franc.  With no major economic data slated for today, expect the dollar to see modest strength as U.S. equity futures point to a lower open for American shares.

The Euro rallied versus the Swiss franc as the Swiss National Bank intervened to weaken its currency after trading to record highs against the Euro and U.S. dollar.  However, the common currency slipped modestly against the U.S. dollar as a French report showed industrial production fell more than economists estimated in June.  The flow of recent weak data out of the Euro zone has caused traders to increase bets that the ECB will need to cut its benchmark interest rate in the coming months.  According to a Credit Suisse Group AG index based on swaps, the ECB may cut its key rate by 31 basis points over the next 12 months.  This compares to an expected increase of 25 basis points that was signaled on August 1. 

The Japanese yen rose against the greenback as U.S. stock futures declined and the Swiss National bank intervened, causing the currency to become the top safe-haven choice of traders.  The yen traded within 1.0% of its post WWII high versus the U.S. dollar, spurring increased concern a stronger local currency will derail Japan’s export-led recovery.  Finance Minister Yoshihiko Noda said in parliament today that one-sided moves in the yen can hurt growth.  The yen’s gains may be hindered somewhat in the coming days as investors will undoubtedly see risk of another intervention by the Bank of Japan.  

The British pound fell against the Euro and the U.S. dollar as the Bank of England maintained its dovish stance towards the U.K. economy and future interest rates.  BoE Governor Mervyn King said headwinds buffeting the U.K. economy are intensifying “by the day” and officials can expand stimulus if the outlook for growth deteriorates further.  The BoE said that inflation may reach 5.0% this year before easing through 2013.  It see inflation at about 1.8% (under its 2.0% limit) in the second quarter of 2013.  However, the pound may continue to trade in relatively strong ranges as the European debt crisis and uncertainty in the United States has mildly boosted demand for British assets.

US$ Retraces Yesterday's Gains as Stocks Look to Rebound

The U.S. dollar retraced much of its gains from yesterday’s trading session overnight as U.S. stock futures foreshadow American shares will modestly rebound from yesterday’s rout.  In the first trading day since S&P downgraded U.S. debt from AAA to AA+, U.S. stock indexes fell over 5.0%, mirroring aggressive sell-offs in European and Asian equities.  Nevertheless, investor uncertainty is undoubtedly high as can be seen in the rise of the price of gold, a traditional safe-haven investment.  Indeed, gold reached a new record today, trading $40 higher than yesterday’s record close.  With no major economic data slated for release today, traders will shift their focus to this afternoon’s Federal Open Market Committee meeting.  Some have speculated that the Fed will repeat its pledge to maintain stimulus measures to revive the economy, boosting stocks but weighing on the greenback.  Fed policy makers are likely to embark on a third round of quantitative easing, moving “more decisively” to secure the U.S. recovery, Harvard economist Kenneth Rogoff said yesterday.  As a result, investors will likely be hesitant to buy the dollar given the risk of further bond-purchases by the Fed.

The Euro rebounded from yesterday’s losses as some believed the common currency was oversold.  However, the Euro remains near recent lows versus the U.S. dollar as global demand for riskier assets has diminished over the last two weeks.  The Stoxx Europe 600 Index has fluctuated between positive and negative today after falling for the past eight consecutive days.  The Euro has been buoyed as Spanish and Italian government bonds rose for a third straight day as the European Central Bank purchased the debt.  Nevertheless, the European debt crisis will continue to hamper the currency’s strength over the foreseeable future.

The Japanese yen continued its push higher as global economic uncertainty boosted demand for relatively safer assets.  The yen has nearly erased its decline since Japan’s unilateral intervention in the foreign-exchange market pushed the currency lower on August 4^th.  The Bank of Japan added 10 trillion yen of monetary stimulus on the same day.  BOJ Governor Masaaki Shirakawa said today that volatile exchange rates could have a “negative impact” on the economy. 

The British pound has advanced against most of its counterparts as investors sought the relative safety of U.K. assets amid global financial turmoil sparked by the U.S.’s credit downgrade and the continued uncertainty surrounding the European sovereign debt crisis.  However, the pound pared its gains against the U.S. dollar after a report showed U.K. manufacturing unexpectedly fell in June and the trade gap widened, adding to evidence the economy is faltering.  U.K. factory output declined 0.4% in June from the previous month, when it rose 1.8%, the Office for National Statistics said today in London.