The publication of quarterly results of U.S. companies continued this week, pushing stocks to rise, peaking with the Dow Jones Thursday while macroeconomic indicators have succeeded, helping to bolster investors in the event of a the crisis. More economic crisis seems to fade, the more traders seem to get away from a strategy of risk aversion, other factors taken into account in their investment decision. This explains why the dollar has remained fairly well this week, the logic of risk aversion with less effect on the price of currencies.
The euro – the single European currency is obviously one of the big winners in recent weeks. Closely linked to Dow Jones, the euro has benefited from an improvement of global economic prospects, although the situation in the euro zone is still a bit complex. Indeed, the macroeconomic indicators which were published this week left many questions unanswered. Thus, if the index of consumer confidence and business leaders in the euro zone rose to 76 points in July, unemployment, meanwhile, climbed to 9.4% in June and decline in price over one year stood at 0.6% in July. Therefore, the euro area is still far from being out of the crisis, knowing that in most situations depending on the country vary widely. As has been noted Florence Pisani, an economist at Dexia AM, in an interview with the Figaro, the recovery starts to take shape across the Atlantic should benefit only marginally in the euro area, given that the takeover should be particularly weak and fragile. Therefore, a backlash in the coming months could penalize the exchange rate of the euro if European leaders can not provide guarantees to investors.
The dollar – In normal times, the dollar would have faced the odds this week. Indeed, the macroeconomic indicators published were rather positive in general and the stock market was well paid. As a safe haven, the dollar should therefore decline against other currencies like the yen. However, the U.S. currency, although it has shown down much of the week against the euro, has resisted. Indeed, investors now believe that they can no longer thinking only in terms of risk aversion. Other factors are therefore taken into account, including the possibility, revived this week, a rate hike from the Federal Reserve in the months ahead. This hypothesis was corroborated by what the President of the Federal Reserve of Philadelphia, Charles Plosser, in the Wall Street Journal. The latter has in fact argued for a rate hike, but as is pointed out by the observers of the foreign exchange market, C. Plosser did not currently vote at the Monetary Policy Committee of the Fed. In addition to this hypothesis, which should not occur for months, the dollar was also supported by confirmation of a mitigation of the crisis across the Atlantic. The publication of the Beige Book from the Fed and the U.S. GDP figures have marked the week’s trading. The Beige Book said the beginning of a stabilization of the economic situation in the United States while the GDP declined by only 1% in the second quarter, against 1.5% expected a slowdown that was greeted with optimism by the President Obama.
The Australian dollar – Traders who wish to have good investment opportunities are interested in Australian dollar. For several weeks, the Australian currency is the front of the stage, always reaching higher on the foreign exchange market. This week, the Australian dollar was particularly supported by the comments of the Governor of the Reserve Bank of Australia, Glenn Stevens. The latter has in fact assured the appreciation of the Australian dollar, which gained nearly 30% since February and has also hinted that the central bank might decide to raise interest rates soon, without even waiting for the unemployment has fallen. Now, investors are awaiting the publication of minutes of the meeting dernièure the central bank, to be published next week, to have confirmation of the change in strategy of the central bank. If this hypothesis is confirmed, the Australian dollar could draw much profit rate differential with other currencies. For now, only one fly in the ointment remains is the possibility of a credit tightening in China, as was mentioned this week, which could have an impact on the Chinese industrial production and thus on the Australian dollar.