Disappointing US Retail Sales Data
The US dollar fell close to a three week low as US retail sales data showed an unexpected decline in December normally the busiest retail sales season of the year. A separate U.S. Labor Department showed that jobless claims rose during the week that ended January 9th. New unemployment claims jumped to a total of 444,000, 11,000 more than the previous week. The dollar extended losses after the Fed’s beige book report that showed modest economic improvement.
Rising Commodity Prices Prompt Loonie Gains
The Canadian dollar rose against its US counterpart as investors speculated that rising commodity prices will spur recovery in Canada. The Canadian dollar advanced 3.5% last month and is on track for parity with the US dollar for the first time since 1976. Commodity linked currencies are expected to gain as rising demand for raw materials will increase due to recovery. US growth is expected to raise demand for Canadian oil and natural gas. The Aussie dollar rose against all of its major competitors today as Australia’s statistics bureau said that the country added 35,200 jobs in December and that the Australian Reserve Bank may raise its rates by a quarter of a percentage point. Jane Foley of Forex.com stated, “The strength of the Australian dollar is again lending support to the Canadian dollar and the New Zealand dollar.”
Trichet’s and Merkel’s Remarks
The euro declined against the greenback after European Central Bank President Jean Claude Trichet said that the outlook for the euro zone region is ‘uncertain’ and added that “Greece fiscal problems won’t get any special treatment.” Germany’s Chancellor Angela Merkel said that Greece’s fiscal problems would lead to a “very difficult phase” for the 16 nation currency. Greek Prime Minister George Papandreou’s government has a plan to push the country’s deficit below the EU’s budget limit in 2012. Referring to Greece, Trichet said, “no government, no state can expect special treatment.” Greek fiscal problems will likely plague the euro for some time to come.
