USD
The U.S dollar rose sharply against its major rivals Friday, as economic data showed evidence the U.S. recession is easing, boosting demand for the nation’s assets. The EUR/USD climbed 1.3% to $1.3968 as a government data that showed the U.S. economy lost far fewer jobs in May than had been feared, buoying hopes that the worst of the recession has now past.
Analysts said that the Dollar’s strong move is likely to gain further support because as bad as the U.S. looks, it looks better than other countries. Earlier this week, the USD rallied on a report that major Asian central banks vowed to support the U.S. currency and Treasuries. The greenback also had its best week since February versus the Yen, adding 3.5% to reach 98.64 yen. The Yen has been most sensitive to rising risk appetite because the more investors seek risk, the less they need to hold the low-yielding currency.
It appears that the markets are moving to a situation where stronger economic numbers are actually good for the U.S dollar, which might be an indication that the pessimism on the Dollar has been overdone. Analysts expect the U.S. currency to rebound after its previous losses, as investors start to focus on improving U.S. economic fundamentals. In case the Dollar breaks its resistance level of $1.4090 it may appreciate as high as $1.3870 vs. EUR this week
CAD
On Friday, the Canadian dollar fell to its lowest level in a week against the U.S. currency after Canadian jobs figures showed that Canada lost more jobs than expected in May, and the unemployment rate surged to an 11-year high of 8.4%. The USD/CAD slipped 2.5% to C$1.1190 versus the greenback, sharply down from Thursday’s close at C$1.0968 to the U.S. dollar. For the week, the Canadian currency fell 1.9%.
Canada’s dollar rallied 9% this year against the currency of the U.S., the nation’s biggest trade partner, as prices of commodities including crude oil rose. The Bank of Canada sounded a cautious note on June 4 when it reiterated a pledge to keep its benchmark Interest Rate at a record-low 0.25% for the next year. The Bank of Canada sounded the alarm about the currency’s rise on Thursday by stating that a sustained rally in the currency could undermine recent significant improvements in economic conditions.
Analysts said that the recent appreciation of the Canada dollar has been overdone, as traders are beginning for the first time in months to price in chances that the U.S economy is emerging from recession. The Canadian currency tumbled from near an 8 month high as traders speculated the U.S. Federal Reserve may raise Interest Rates. The CAD bearish trend line is likely to continue as the trading week begins, if the currency drops below1.107 level vs. the USD, next price targets are 1.1245 and 1.13.
