Major Currency Pairs Analysis: Euro Climbs Vs. The Dollar

The euro climbed for a second day versus the greenback after a report showed German industrial production rose in June more than analysts forecast, Germany’s top credit rating was affirmed by Fitch Ratings, which said Chancellor Angela Merkel’s government had beat its own budget targets and positioned Europe’s largest economy on the path to growth. Germany has all the ingredients of a declining public debt path,” Fitch said. “The economy is growing, the budget position is relatively favorable and nominal interest rates are low. While the debt crisis, closing in on its fourth year, “is not yet over,” Fitch said risks posed to Germany have receded because of euro-area-wide budget rules and the European Central Bank’s promise to buy sovereign debt if countries sign up to reforms.
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GBP/USD
Bank of England’s consideration of inflation tempered speculation the central bank will keep borrowing costs at a record low. Gilt yields rose to the highest in more than a month after Carney took the unprecedented step of saying the bank probably won’t raise its benchmark from a record-low 0.5 percent until unemployment falls to 7 percent. While policy makers don’t expect that to occur before the third quarter of 2016, investors bet faster inflation will force them to act sooner. The pound rose as much as 1.2 percent to $1.5530, the highest in almost seven weeks.
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USD/JPY
The yen rose to a seven-week high versus the dollar amid bets the Bank of Japan at its policy meeting tomorrow will refrain from adding to stimulus that’s helped weaken the currency 11 percent this year. The BOJ won’t expand stimulus at the end of its meeting tomorrow, the central bank currently buys more than 7 trillion yen ($72 billion) of government bonds every month as part of its effort to increase annual inflation toward 2 percent in two years. The yen has gained 4.6 percent over the past three months.
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USD/CAD
Canada’s dollar slid to the lowest in almost four weeks as commodities fell for a fourth day and stocks sank amid bets the Federal Reserve may slow quantitative-easing stimulus in the nation’s biggest trade partner. The currency extended losses, falling against most major peers, after a report showed building permits dropped in June for the first time this year. The discount applied to Canadian heavy oil, the nation’s biggest export, was almost the biggest in three months. Canada’s payrolls grew by 10,000 jobs last month after losing positions in June; data due Aug. 9 are forecast to show. The Canadian dollar depreciated 0.4 percent to C$1.0415 per U.S. dollar.
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