Major Pairs Analysis: May 17, 2013

Denmark has decided to shelf its euro adoption goal indefinitely after Prime Minister Helle Thorning-Schmidt said an exchange rate peg without full European monetary membership is the best currency regime for the Nordic nation. The euro has been subject to a lot of uncertainty over the course of the last couple of years, actually many years, and the time isn’t ripe for a referendum on Denmark joining the euro. That doesn’t change the fact that Denmark will remain at the core of European cooperation. The euro was traded at $1.2874.
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GBP/USD
Lawmakers from David Cameron’s Conservative Party voted against the government’s legislative program in a show of defiance over his policy towards the rest of Europe. A total of 133 members of the 650-seat Parliament, 116 of them Conservative, voted yesterday to express “regret” over the Queen’s Speech last week, when the legislative agenda was announced. They were unhappy that it didn’t include a provision for a referendum on continued European Union membership. Their bid was defeated by the combined votes of Cameron’s Liberal Democrat coalition partners and the opposition Labour Party.
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USD/JPY
Investors are more confident in a Prime Minister Shinzo Abe’s policies. The number of respondents who are more optimistic than pessimistic on the impact of Abe’s plans on Japan’s investment climate rose to 66 percent this month from 54 percent in January, Abe bought time and succeeded in changing people’s minds, We’re seeing the effects of this ‘sake’ through foreign investors increasing Japanese exposure. A government report on Thursday showed gross domestic product rose 3.5 percent at an annualized pace, the most in a year, propelled by consumer spending and export gains. The yen touched 102.76 per dollar this week, the weakest since October 2008, helping to make exporters more competitive.
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USD/CAD
The Canadian dollar declined for a fifth time in six days versus its U.S. peer as a regional Federal Reserve president said the central bank may begin slowing monthly bond-buying as the labor market strengthens. The currency approached an almost three-week low, falling 0.4 percent to C$1.0195 per U.S. dollar. It touched C$1.0219 yesterday, the weakest since April 25. One loonie buys 98.09 U.S. cents.
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