Elroy:
"The Swiss Franc also dropped significantly after the Swiss unemployment rate rose to 3.9 pct in November from 3.7 pct in October, increasing market speculation that the Swiss National Bank will leave the cost of borrowing unchanged at its Dec 16 meeting"
LONDON (AFX) - The dollar continued to rise on consolidation after its recent sharp falls, with the prospect of interest rate hikes by the US Federal Reserve returning to the fore after rates in Canada and Australia were left unchanged
The dollar's gains began after the Bank of Canada announced yesterday it was leaving interest rates unchanged at 2.5 pct and issued what the market perceived as a dovish accompanying statement. The Canadian dollar is currently trading at around 1.22 against the US dollar, falling sharply from around 1.95 just before yesterday's rate announcement
"This move in the Canadian dollar seems to have led the dollar reversal pattern," said HSBC analyst Clyde Wardle
The BoC made it clear that the Canadian currency's sharp appreciation against its US counterpart was the major factor in its decision to leave rates unchanged. If exchange rates were to persist at current levels, and all other variables remained equal, "there would be a dampening effect on aggregate demand for Canadian goods and services," the BoC said
A drop in commodity prices, the BoC's decision and this morning's announcement by the Reserve Bank of Australia that it is also leaving rates unchanged, left the Canadian, Australian and New Zealand dollars -- the so-called 'commodity currencies' -- the biggest fallers of the day
Meanwhile, weak Japanese economic growth figures released this morning also helped pull down the yen
The Cabinet Office in Tokyo revealed this morning that Japan's July-September GDP data grew a revised real 0.1 pct from the previous quarter. On an annualized basis, growth was revised down to just 0.2 pct from an already anemic 0.3 pct
Among European currencies, today provided good opportunities for profit-taking after the euro reached a record high of 1.3467 usd and after sterling recently hit a 12-year high, coming ever closer to the 2 usd mark
The Swiss Franc also dropped significantly after the Swiss unemployment rate rose to 3.9 pct in November from 3.7 pct in October, increasing market speculation that the Swiss National Bank will leave the cost of borrowing unchanged at its Dec 16 meeting |
