The U.S. dollar held nearly all of its gains from the previous two days and is headed for a weekly advance against almost all of its counterparts. The greenback extended its gains against the commodity-based currencies, such as the Australian and New Zealand dollars, as the price of both gold and oil continue to reel. The U.S. dollar has benefited from safe-haven flows over the course of the week and should see continued support throughout the day as European and Asian have fallen an additional 2.0% and futures indicate the Dow Jones Industrial Average will extend the biggest two-day decline since 2008. There is no major data slated for release today in the United States, so expect the U.S. dollar to once again take its cues from global equity markets.
The Euro was mostly unchanged against the U.S. dollar overnight but remains at 9-month lows versus the greenback. The Euro remained under pressure as the Stoxx Europe 600 index fell over 2.0%, squashing demand for the higher-yielding currency. The Euro found modest support after finance ministers from the G-20 nations said they are “committed” to a strong coordinated international response to address the renewed challenges facing the global economy. However, overall the Euro has lost this week on concern Europe will not be able to contain its debt crisis, even after Greece accelerated budget cuts to qualify for next month’s payment under a 110 billion euro international bailout. There was no data released in the Euro-zone today.
The Japanese yen continued to push higher against all of its counterparts on widespread risk aversion. However, the USD/JPY pair has held in a tight, one percent range for the entire week. The yen has appreciated 12% over the past three months, the best performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighed Currency indexes. The dollar, the second best performer, gained 5.4% while the euro has lost 1.2%.
The British pound pared its losses against the U.S. dollar but the currency remains near its weakest level since January versus the greenback. The pound is headed for its fifth-straight weekly decline against its American counterpart, the longest losing streak in more than a year. The currency was under pressure this week amid concern that global economic growth was slowing. The International Monetary Fund cut its 2011 and 2012 U.K. economic growth forecasts this week to 1.1 percent and 1.6 percent. The Washington-based IMF previously projected expansion of 1.5 percent and 2.3 percent respectively.
