Market news
27.12.2010, 08:02

Forex: Weekly review

On Monday the euro weakened on speculation some European nations will struggle to raise funds amid the region’s debt crisis after rating companies downgraded the creditworthiness of Ireland and considered additional cuts.
The Swiss franc climbed to a euro-era record, appreciating 1.1% to 1.2641. Against the dollar it appreciated 0.3% to 0.9655.
The Swiss National Bank last week held the three-month Libor target rate at 0.25% in an attempt to keep a lid on the currency. The franc’s strength against the euro has threatened the country’s export-led recovery.
On Tuesday the euro rose from near a two-week low against the dollar and yen after Chinese Vice Premier Wang Qishan said his nation had taken “concrete action” to help the European Union with its debt problems.
On Wednesday the greenback fluctuated versus its major counterparts after the Commerce Department said gross domestic product rose at a 2.6% annual rate in the third quarter, compared with the 2.8% pace forecast. The euro gained earlier as German import prices in November climbed the most in a decade.
The pound fell versus the euro after a report showed the U.K. economy expanded at a slower rate than previously estimated in the third quarter. Data from the Office for National Statistics showed Britain’s gross domestic product rose 0.7% in the third quarter. That compares with an initial estimate of 0.8%. Second-quarter growth was revised to 1.1% from 1.2%. Minutes of the Bank of England’s December meeting showed policy makers remained split in their decision to keep the benchmark interest rate at a record low 0.5 percent and the asset-purchase program unchanged at 200 billion pounds.
On Thursday the dollar fell against the yen for a fourth straight day in the longest stretch of declines in more than two months as reports showed the U.S. economic recovery is gathering pace, fueling demand for the Japanese currency to fund investments in growth.
The British currency rebounded from near a three-month low after BOE Markets Director Paul Fisher told the Daily Telegraph the U.K.’s borrowing costs will “head back to a normalized position” of 5 percent.
The yen gained for a fourth day versus the dollar, its longest streak since Oct. 8, on signs China is taking more measures to cool growth.
New Zealand’s currency surged as Finance Minister Bill English said the nation’s economic expansion will accelerate next year.

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