The Canadian dollar ranked among the worst performers in currency markets today as risk aversion influenced commodities and equities trading, which are strongly related to the loonie’s rates as weak economic data in the country also influenced the confidence towards Canada’s currency.

Speculations that interest rates hikes would happen anytime soon in Canada faded further away as consumer prices retreated according to a report published today, which forced the loonie down in a day were demand for raw materials declined, affecting the outlook for the Canadian economy as half of the country’s exports are commodities. The U.S. dollar advanced sharply versus its Canadian counterpart ask risk aversion brought traders to purchase safer assets in the world’s wealthiest nation, pushing the loonie away from parity with the greenback this Wednesday in foreign-exchange markets.

A considerable amount of strength in the loonie’s rally since the beginning of the year was based on the fact that a fast paced recovery would improve odds of interest rate hikes by the Bank of Canada, which has not been confirmed or signaled by the Canadian financial authorities so far, decreasing attractiveness for the loonie. Today, the commodities market was also bearish, affecting demand for Canadian raw materials and causing a double impact on the loonie rates.

USD/CAD traded at 1.0472 as of 19:23 GMT from a previous rate of 1.0314 yesterday. CAD/JPY traded at 87.06 from 88.39.

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The Swiss currency finally felt the central bankers pressure and declined considerably versus most of its main trading partners’ currencies, on speculations that measures will be taken by the financial authorities to avoid the franc to gain.

The Swiss franc dropped even versus the European single currency as some of the bloc’s members are providing negative economic data, evidencing that the Swiss National Bank pressure to halt the franc’s rally is taking effect. The pound was one of the biggest winners versus the franc as the U.K.’s inflation rose beyond forecasts.

GBP/CHF traded at 1.6886 as of 22:31 GMT from a previous rate 1.6737 yesterday.

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The Canadian dollar fell today after the nation’s central bank left interest rates unchanged at an all time record low, declining rate hikes speculations despite the favorable economic data published in Canada during the past few weeks.

The loonie dropped versus most of the 16 most traded currencies today after the central bank affirmed that interest rates will remain unchanged until June, decreasing sharply the attractiveness for the loonie as traders expected the good performance of the Canadian economy to produce more immediate results in terms of interest rate hikes. The Bank of Canada also made a statement against the loonie’s strength, which, according to its officials, is a threat to the economic growth in the North American nation, forcing the loonie down specially versus its a stronger greenback that advanced versus all of the 16 main traded currencies.

The lack of a hawkish tone in Canada’s central bank declarations affected the outlook for the loonie, which have been gaining on speculations that stronger economic conditions in the country would allow the BOC to raise interest rates sooner than expected, but its dovish position and against a strong loonie will certainly be an obstacle for loonie’s further advances.

USD/CAD traded at 1.0320 as of 15:28 GMT from a previous rate of 1.0255 in the intraday comparison. CAD/JPY traded at 88.24 from 88.45.

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The U.K. currency may be experience a shift on its sentiment as speculations suggest that the current quantitative easing measures used by the nation’s central bank will be terminated, as the country starts to publish positive economic reports, suggesting that the recession may be ending in the British Isles.

This week will be decisive for the pound as inflation yearly numbers are due to be published the next Tuesday, and if forecasts will be confirmed, the numbers are expected to surpass Bank of England’s target below 2 percent for the first time in seven months, fueling even further speculations that quantitative easing measures will be lifted in the U.K. anytime soon this year. The 200 billion pounds used for bond purchasing will have their last part of 25 billion to be used by early February, and the next central bankers’ meeting may already bring better news for the sterling if the country’s monetary policy change its direction.

The pound has been suffering from an insistent recession combined with a struggling financial system and ineffective policies taken by the Bank of England to combat the crisis, but as economic data improves, the pound may advance considerably, since it was one of the currencies who lost the most among the main traded ones in foreign-exchange markets last year.

GBP/USD traded at 1.6277 as of 02:20 GMT from a previous rate of 1.6256 when markets closed last Friday.

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This Friday’s shift in market sentiment allowed the U.S. dollar to post a weekly advance versus most of the main

higher-yielding currencies, as risk aversion rose globally and traders opted by the relative safety provided by dollar-priced assets.

The dollar gained significantly versus commodity producer currencies like the Brazilian Real and the Australian dollar towards the end of this week as China’s new lending restrictions raised concerns that demand for raw materials may decline in the country, affecting exports from these countries. The dollar also reverted a losing trend versus the euro and ended the week with a positive result as some of its member countries increasing budget deficit are raising speculations that the currency attractiveness may be impacted among traders, making the European single currency to drop sharply in this week’s last trading session.

Even if economic data published in the U.S. during this week was below forecasts, pessimism was stronger and allowed not only the dollar, but also the yen to outperform most of main trading currencies towards the end of the week. Fed rate hikes speculations declined significantly, but the dollar may continue to sustain its current levels as uncertainty regarding the global economy remains considerable.

EUR/USD closed the week at 1.4381 from 1.4505. NZD/USD closed the week at 0.7368 from 0.7424 on Thursday.

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The euro declined today versus most of the 16 main trade currencies as some of its member countries, specially Greece, are having a hard time to adjust its national accounts, decreasing confidence among investors to inject capital in the region.

Greece’s deteriorating financial situation once again influenced negatively the euro’s outlook as German Chancellor Angela Merkel affirmed that the Southern European budget deficit may hurt the sentiment among investors regarding the common currency, which had been already impacted by Greece’s credit rating when it was downgraded for the second time in a year in late 2009 by Standard and Poor’s. European Central Bank Jean-Claude Trichet also affirmed that the euro’s future remain uncertain, decreasing even further the appeal for the currency, which lost versus the greenback despite weak economic data published today in the United States.

According to analysts, not only Greece, but countries like Portugal, Spain and Italy may threaten the euro’s performance as they also face complicated financial scenarios, with budget deficit’s much beyond the Eurozone members maximum accepted level, which in theory has a limit of 3 percent of gross domestic product.

EUR/USD declined to 1.4478 as of 15:45 GMT from a previous rate of 1.4515 in the intraday comparison. EUR/GBP fell to 0.8878 from 0.8907.

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The United Kingdom has been showing itself as one of the least resilient nations among the wealthiest countries in the world, and its weak economic data combined with a ineffective monetary policy is likely to set the sterling further down in the first semester of 2010, specially versus

higher-yielding options

Bank of England policy makers insisted to extend its so far frustrated bond purchase strategy, injecting its remaining 200 billion pounds on the program, as interest rates remain at an all-time record low of 0.50 percent, maintaining the pound’s outlook negative, specially as the traders started the year with high levels of risk appetite. Commodities linked currencies like the Australian and the Canadian dollar are likely to rally further versus the pound this year, and demand for energy is likely to favor these oil producer’s currencies, specially for Canada’s currency, as the winter in the Northern Hemisphere has been one of severest in the past year, increasing demand for energy in the United States.

This week will be marked by a monthly manufacturing production report in the U.K., which has provided mixed data in the past months, but nevertheless, as analysts aren’t very optimistic regarding British economic growth in the first quarter of 2010, the pound has considerable odds to lose further versus the currencies above mentioned.

GBP/CAD started this week trading at 1.6495 from as high as 1.6850 one week ago.

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The pound climbed just over two cents against a broadly weakened aussie dollar on Friday with a rise in risk aversion putting selling pressure on the higher-yielding currency.

• Weak data in the US and plummeting global equity markets enable the pound to gain as investors took the opportunity to cash profits in the aussie and retreat to safer assets.
• Analysts have recently noted that the rally in risky assets could come to an end. Conditions for perceived riskier assets to gain requires a flow of positive economic data combined with loose global monetary policies and low interest rates.
• The strong US GDP figure supported the rally in higher-yield currencies, but as the economic recovery shifts the balance in favour of tightening policy, it will likely signal the end of the rally in risky assets.
• However, the aussie is trading strongly again this morning, currently up over a percent, as investors bet that the Reserve Bank of Australia will raise interest rates at their meeting on Tuesday.
• Traders also said that Chinese data showing manufacturing activity at an 18-month high helped to mitigate some of the recent loss in risk appetite, bolstering aussie demand.

The greeback pulled back from its sharp sell-off on Thursday, as weak US economic data spurred a return to risk aversion.

• In early trading, the dollar continued to lose ground following the better-than-expected US growth data, however the GBP/USD rally was capped at 1.6600, and the UK currency pulled down steadily, eventually closing down 0.6% ay 1.6448.
• US markets went through losses on Friday, with financials and materials leading the path, as risk aversion returned after Thursday’s optimism, strengthening support for the greenback.
• On the macroeconomic front, data revealed that US consumer spending declined 0.5% in September, the largest decline since December 2008, further buoying the dollar rally.
• Positive manufacturing data from the Midwest in the afternoon failed to dent dollar buying in the markets and traders acknowledged that part of this may have been due to month-end flows into the US currency related to foreign portfolios.
• The US currency has continued to climb in trading this morning, currently half a percent up, as investors remain cautious ahead of big events this week, including interest rate decisions in the UK, eurozone and US.

The pound continued to rally yesterday and is now poised to snap a three-month decline versus the euro, as the UK showed positive economic signals.

• Data from the Bank of England revealed that UK net consumer lending rose less than expected in September but the number of loans approved for house purchases did hit its highest level in 18- months.
• Mortgage approvals rose to 56,215 from a revised 52,970 in August, which is the highest level of approvals since February last year and marks a solid recovery from September 2008 when only 33,419 mortgages were approved.
• The more positive data saw traders trimming excessive short positions in the pound, enabling the UK currency to briefly extend gains over 1.12, and suggesting that the markets may have overreacted to the surprisingly weak GDP data last week.
• Analysts noted that the UK currency also benefited as the euro fought to stem its broad slide this week, as traders saw the slump in global equities earlier in the week as a sign to sell the single currency.

The pound advanced by 2.3% against the aussie as risk appetite stumbled in the wake of weak US economic data and a steep slide in global equities.

• In the early session, Australian inflation data was revealed to be slightly below expectations, leading investors to pare bets that the Reserve Bank of Australia will decide on a hefty interest-rate hike next week.
• The consumer price index rose in the third quarter by an annual 1.3%, the smallest gain since the second quarter of 1999, after advancing 1.5% in the previous three months.
• In addition, the price of gold continued to fall in trading yesterday, finding resistance around $1030 per ounce, which dulled demand for the commodity-driven currency.
• The pound was able to reach a three-week high of 1.8290 as investors shed their risky assets yesterday, and the pound could advance further if the US GDP data, released later today, disappoints market expectations.

The single currency slipped further away from recent 14-month highs against the dollar yesterday, losing nearly a cent to close down at 1.4707.

• The US dollar rose, stretching a rally against the euro to a fourth day, supported by weak U.S. economic data that weighed on equity markets and led investors to seek safety in the greenback and cut exposure to assets perceived as risky.
• Initially though, the euro pared early losses after data showed core US durable goods orders were better-than-expected in September.
• The report revealed that the core figure, which excludes transport equipment, rose by 0.9%, higher than forecasts of a 0.6% rise, strengthening risk appetite in the market.
• However, in the afternoon the euro extended losses after further data showed that US home sales unexpectedly fell, declining 3.6% last month to an annual rate of 402,000, disappointing market forecasts that expected a 2.6% rise.
• Analysts noted that the soft housing sales figure offset positive durable goods orders, given that the latter data is generally volatile and sometimes does not represent the whole economic story.
• In trading today, investors will be eagerly awaiting US 3rd quarter GDP data, released at 12:30.

Sterling climbed over a cent and a half against the kiwi in trading yesterday as the market briefly turned bearish on higher-yielding currencies.

• The pound reversed losses incurred on Monday, but closed the day some way from its intra-day high of 2.2000 as investors held back from taking significant positions ahead of the UK MPC minutes released today.
• The kiwi dollar, which has broadly risen as the global economy shows increasing signs of recovery, fell back as demand for “riskier” assets stumbled following some weak economic data from the US economy.
• The US Producer Price Index revealed an unexpected monthly drop of 0.6%, with forecasts predicting a rise of 0.1%. Housing starts also disappointed market expectations, resurfacing concerns over the pace of US economic recovery.
• In response, global equities also halted their recent rally, which spurred a pull back from higher-yielding currencies, allowing the pound to gain.
• In trading this morning, the pound is broadly rising, sustained by the minutes from the latest UK MPC minutes, which revealed that a unanimous decision to keep QE on hold.

The single currency slipped back from a fresh 14-month high against the dollar following further comments from the ECB that expressed apprehension over the euro’s strength.

• In early trading, options buying once again prevented the euro from pushing through the psychologically important $1.50 level, posting a high of $1.4993.
• The single currency was supported after further positive corporate earnings weighed on haven demand for the dollar, emboldening investors to sell the low-yielding US unit to fund the purchase of riskier, higher-yielding assets elsewhere.
• However the euro fell back as the ECB repeated their support for the US Treasury’s self-professed strong-dollar policy, and expressed concerns over recent “volatile” trends in the market and the strength of the single currency
• In the afternoon Wall street slipped as tame US inflation data offset strong quarterly earnings from Apple, denting investor appetite to sell the low-yield dollar.
• The economic data, which showed that the US PPI unexpectedly dropped by 0.6% last month, disappointed market expectations and helped the greenback recover earlier losses, though analysts said that it would remain under pressure as long as stocks continued to show an upward trend.

Sterling capped its five-day upward trend against the dollar, falling back from a one-month high of $1.6487 as weak economic data supported the haven currency.

• In early trading, sterling held steady against the dollar after UK public finances showed a weak figure but better than market expectations, which offset the negative impact of news that Qatar are selling a significant stake in Barclays bank.
• Data showed a deficit reading of £14.8 billion bringing Britain’s public spending to its worst six months on record, however, the data was better than forecasts, which analysts said boosted sterling’s gains.
• In addition, the US dollar came under pressure as risk appetite continued to rise following encouraging quarterly earnings from US corporations, such as Apple and Caterpillar.
• The US currency found some support in the afternoon though after data revealed weaker than expected US PPI and housing starts figures, which were able to induce some haven demand for the broadly weak dollar.
• In trading this morning, the pound has resumed its upward trend against the greenback, currently up over a percent as the UK MPC minutes confirmed that the decsion not to extend QE was unanimous.

The kiwi advanced over three and a half cents (1.6%) against the pound yesterday as investors showed renewed enthusiasm for risky assets.

• Rising commodity-prices and stronger-than-expected corporate earnings in the US have contributed to continued demand for higher-yielding currencies.
• In addition, investors are now pricing in that New Zealand’s central bank is likely to drop its monetary- easing bias at its meeting next week as economic data point to improvement.
• Although there has been speculation that the RBNZ has expressed concern that the strength of the kiwi is frustrating economic recovery, strong data has investors questioning whether the central bank can keep interest rates on hold until the middle of next year.
• In trading this morning, the New Zealand dollar has capped its gains, with the price currently hovering just above 2.17.

Sterling recovered some of its recent extensive losses against the aussie dollar yesterday, climbing over two cents, to close up at 1.7668.

• Bank of England member, Paul Fisher, said yesterday that policy makers would be more likely to pause asset purchases in their upcoming meeting in November, giving themselves the option of “doing more later,” rather than stopping them.
• His comments were taken to read that the MPC is unlikely to extend their quantitative easing programme, supporting a slight rise in confidence in the UK economy, strengthening the pound.
• In broad terms, the aussie traded strongly against most currencies yesterday as positive economic data in the US led to investors adding to their long positions in the higher-yielding currency.
• Indeed in trading this morning, the pound has halted its climb, with the pair currently holding around the overnight closing price, as enduring aussie strength offsets sterling’s rally.

The single currency pushed higher once again as the greenback suffered from rising appetite in the wake of positive economic signs.

• The dollar initially made after ECB President Trichet said that the US government and the Federal Reserve should pursue policies supporting a strong dollar and that excessive foreign-exchange volatility is an “enemy.”
• However the euro trimmed its losses in the afternoon following positive US data, which bolstered expectations that the economy is recovering.
• US jobless claims beat market forecasts dropping a further 10K week-on-week. The US CPI figure also rose marginally to 0.2%, supporting growing optimism over the economic recovery.
• The greenback also suffered after both Goldman Sachs and Citigroup reported better-than-expected earnings in the third quarter.
• Goldman Sachs posted a net income of $5.25 a share, compared with the average estimate of $4.18 a share, and profits for the period were $3.19bn, a four-fold increase from the same period in 2008.
• In trading this morning the euro has slipped back slightly but the price remains at near 14-month highs, hovering just above 1.49.