By the end of Friday’s trading session, sterling gained 0.8 percent to reach $1.5641 versus the United States dollar. The Aussie also gained to $1.0560. Despite the higher levels reached by the greenback, Friday’s trading session saw an unexpected drop. United States unemployment reports showed a gain of 163,000 jobs. Although this is higher than the expected 100,000 jobs, it still leaves the unemployment at a higher level of 8.3 percent. Compounding this issue, the Federal Reserve Bank announced last week that it was not undertaking any new policy measures until at least September. The negative economic data from the United States has given investors hope that the September policy meeting will bring about another round of quantitative easing.
Versus the United States dollar, the euro rose 1.6 percent to reach a level of $1.2377 on Friday night. At its lowest, the euro was at $1.2167 during the Asian trading session. Comments by the European Central Bank fueled a drop in the already weak euro. The ECB decided last week that it would not be buying government bonds in the near future.
After the announcement by the ECB, the United States dollar rose 0.6 percent against the yen. By the end of trading, it was at 78.59 yen. This is a slight reversal of the trend in recent weeks. Previously, investors had turned to the yen as a safe haven currency. During early morning trading on Friday, the yen reached 78.06 versus the dollar. If the yen keeps appreciating, the Bank of Japan may take action in order to protect their export market. Intervention is expected to happen if the dollar drops below 78 yen.
Canadian Dollar at Parity
Friday ’s trading session also marked the first time since May that the Canadian dollar was at parity with the greenback. The loonie sustained its fourth week of gains against the United States dollar. This gain was fueled by the rise in employment numbers within Canada. During last week’s trading session, the loonie gained 0.2 percent to reach C1.0013 versus the greenback. Currently, one loonie will buy 0.9987 United States dollars.
In response to the rise of the loonie, many future traders are betting that the Canadian dollar will soon decline. Futures or a future contract is an agreement by investors to purchase currency or assets at a set price in the future.
Canada added a total of 9,000 jobs in July which is a marked increase from the 7,200 added jobs in the month of June. The overall jobless rate remained at 7.2 percent in the nation.
Meanwhile, Canadian ten-year government bonds dropped two basis points to reach 1.77 percent. The Canadian dollar was also trading at C$1.2197 on Thursday against the euro.
India Adds Foreign Exchange Reserves
During the week ending on July 27, India’s central bank developed $1.31 billion to $288.64 billion more in foreign reserves. The data shows that Indian reserves grew by $589 million to $287.34 billion in the preceding week. Despite the growth in foreign reserve, India’s holdings in gold reserve remained at $25.76 billion.
Asian Currencies Ease
On Friday, many emerging markets in Asia eased up on the gains they made during the previous week. With the statement by the ECB, investors were increasingly risk averse throughout the trading session.
Despite the high value of the yen, some firms in Japan are still posting high profits. Japan’s All Nippon Airways showed a net profit of 668 million yen during its first fiscal quarter. During the previous year, ANA had been operating at a loss following the tsunami and decreased travel demand. By cutting costs and boosting international travel, Japan’s second-biggest airline managed to post increased profits. Compared to this time last year, sales at All Nippon Airways are up 20 percent.
Syria’s Inflation Jumps
With the public unrest in Syria, one-third of small businesses have shut down. This has caused a drastic rise in unemployment and a decline in the growth rate. The nation is presently suffering from a 22.5 percent inflation rate for the first quarter of 2012. In 2011, this rate was at just 4.6 percent. Some estimates also show the unemployment rate in Syria is at a high of 25 percent.