Major currencies – key points this week

[John from Moneycorp]

Please see a brief summary below of the major global currencies.

AUD: The weak US payrolls number hit every commodity-related currency hard because, as legend has it, if America sneezes the global economy catches a cold. That has not prevented the Aussie from hitting a record high against the pound and coming close to its all-time high against the dollar but it might be a sign that an end to the one-way street is in sight.

USD: If President Obama and the house of representatives cannot reach agreement on the budget and the debt ceiling the United states government will run out of money on 2 August. Few believe it will come to that but the possibility makes investors nervous about the dollar. Last week's horrendously soft payrolls number is another reason for their dislike.

NZD: New Zealand's products are mainly meat and dairy, exports which unlikely to be compromised in any major way by the possible fall in demand for minerals and metals. In the last week the Kiwi has scored record highs against the US dollar, the euro and the pound. It might have further to go.

CAD: Canada's economy is closely aligned to that of the United States and to global demand for oil, of which it is a major exporter. With the US economy stuttering and the risk of a financial crisis in Europe dampening global risk-appetite the Loonie is fighting on two fronts.

ZAR: While the rand is vulnerable to any reduction in demand for commodities, one of its products - gold - is as popular today as it ever has been. On top of that South Africa's 5.5% benchmark interest rate comfortably outweighs its 4.6% inflation rate, a situation that no European or North American currency can match.

EUR: The failure of EU ministers to come up with a comprehensive and permanent solution to the Greek debt crisis is turning into a disaster for the euro. The longer they fail to sort it out, the worse investors fear the problem will become. Italy has now joined Greece, Ireland, Portugal and Spain on the list of government bonds that investors least like to own. As a result the euro has lost ground and is likely to lose more.

GBP: A week ago it seemed that the notion of the pound as a safe-haven currency was a busted flush. After topping the league table in the last seven days the idea seems less crazy. With nothing in the economic data to drive it forward (higher unemployment, flat retail sales), no other argument springs to mind. A safe-haven pound still sounds like a crew-member for the ship of fools but it might just float, given the shortcomings of the opposition.

[John from Moneycorp]

Hi everyone, the latest currency updates are below – thanks.

AUD: The Aussie came second in last week's league table not because of any intrinsic qualities but because it offers a 4.75% interest rate and the financial market panic of the previous fortnight had subsided. The Australian housing market still seems to be under pressure, with July bringing an -8% monthly fall in new home sales and a -15% annual drop in building permits. The Aussie did well last week but not for the right reasons.

USD: Fed Chairman Bernanke failed to announce the expected third round of quantitative easing last Friday but did not rule it out for later this month. However, few investors are in any doubt that the authorities would be content to see the dollar weaken further, QE or not QE. The US economy grew more quickly than Britain and Euroland in the second quarter but not by much. Economists argue that it is unreasonably cheap; that does not mean it will go up in the immediate future.

NZD: From zero to hero the NZ dollar leapt from the bottom of the pile to the top last week. It was all to do with the passing of the two-week panic and a revitalisation of investors' appetite for risk. It helped the Kiwi that New Zealand's trade surplus widened unexpectedly and that building permits leapt by 13% in July while in Australia they went down.

CAD: The Loonie might have done better had it not been held back by the US dollar, which spent the week waiting for the possible announcement of another round of quantitative easing ("printing money") by America's Federal Reserve. Although there was no such announcement last week there could be one within a month. If America starts printing money again it will not sit comfortable with the Canadian dollar.

EUR: August gave some respite to the beleaguered euro. Not only was everyone on holiday, the financial market panic in the middle of the month was a distraction from the lack of cohesion in Brussels. The southern Europe debt crisis is still there and without the intervention of the European Central Bank in the last month it might have been a different story. As we move into September, expect thing to worm up again.

GBP: Ridiculous though the notion may be, it is still possible that investors are treating the pound as a safe-haven currency. In the last week it was one of four tail-enders, along with the yen, the US dollar and the Swiss franc, while the antipodean dollars and the South African rand led the field. Improved investor confidence and a weaker pound, when the data provided no excuse for its punishment, make at least a modest case for its preferment.

[John from Moneycorp]

Hi everyone, the latest updates are below – thanks.

AUD: The Australian dollar was playing the triple-A credit rating card last week, not the commodity card. The currency is not big enough to mix it with the big boys, so could not keep pace with the US dollar or the yen, but it gave sterling a run for its money. It did so despite a further slowdown in the construction sector and a poor employment figure; employment went down by ten thousand in August when it should have risen by that number.

USD: A growing suspicion among investors that Greece would be allowed to default led to an increase in the pace of the exodus from the euro last week. Contributory factors included the resignation of Jürgen Stark from the European Central Bank Executive Board and noises from Berlin suggesting that Chancellor Merkel was preparing the country's banks for a default by Greece. Although default is not yet a done deal, the clouds over Athens are getting darker.

NZD: As investors fled from the wobbling euro some of their money found its way into the NZ dollar but only sufficient to keep the Kiwi one rank ahead of what remains, for the moment, the single European currency. The few NZ ecostats did the dollar no favours. Construction was a particular disappointment, with activity in the sector during the second quarter at less than half the level of the same period three years ago.

CAD: Even though the Loonie could not keep up with the US dollar it did benefit from a general desire among investors to get as far away as possible from the euro zone. It helped its case with an unexpected 12-point improvement in the Ivey purchasing managers' index and a healthy 6.3% monthly rise in building permits while managing to dodge the disappointing loss of 5,500 Canadian jobs in August

EUR: The talk on the street is no longer about what the EU will do about the southern debt problem. Now it is about whether Greece will default this week or next. There are growing signs that Germany is preparing to bail out of the bailout, not least the resignation of Germany's last remaining ECB executive board member, Jürgen Stark. Nobody knows what will happen in Greece does default but they know it will be ugly.

GBP: The failure of the Bank of England to roll out another round of quantitative easing on Thursday sparked a relief rally for the pound. Sterling was left behind by the North American dollars and the yen but made the most of its AAA credit credentials in another week during which risk was more important than return. The few UK economic data were second-division indicators and had minimal impact on the currency.

[John from Moneycorp]

Hi everyone, please see the latest updates below – thanks.

AUD: Nervousness about global growth hurt all three of the commodity-oriented dollars and the Aussie was fortunate to take the least damaging blows. It even managed to outperform the benighted euro, though not through any intrinsic economic qualities. A 1.1% monthly increase for new home sales did little to offset the -16.2% fall in the preceding three months. More worrying was a further decline in the AiG manufacturing index, which showed a worsening slowdown in activity.

USD: The US dollar missed out on another win-win week but it, alongside the Swiss franc, was not far behind sterling. The main handicap for the dollar was the expectation of a positive outcome when the German parliament voted on the country's support for the second bailout of Greece. After that vote went through as expected investors were left with nothing to look forward to and they drifted back towards the US currency.

NZD: As well as the negative sentiment surrounding the world economy, New Zealand also had to cope with a downgrade of its credit rating from AA+ to AA by two of the big three agencies. The unwelcome news added to the downward pressure on the Kiwi. It is now more than -8% of its early-August high against sterling and a further retreat is easy enough to imagine if current technical obstacles can be overcome.

CAD: Among the trio of "commodity" dollars it was the Loonie that fared least well, although it was not far behind the NZ dollar and the Japanese yen. There was no compelling reason for its underperformance other than a vague sense that the Bank of Canada might be inclined to lower its benchmark interest rate when the policy committee meets in three weeks' time. Nevertheless, it lost -1.7% to the pound and a significant -5.1% to the US dollar.

EUR: The good news for the euro was the German Bundestag's vote to support the second Greek bailout. The bad news came two days later with an announcement that Greece would miss its target of reducing its budget deficit to 6.5% of GDP next year. In theory that means Greece will not be allowed to receive any more bailout money. In practise it just means that EU leaders will have to come up with a plausible reason why that will not happen. Either way, it is not a positive development for the euro.

GBP: Sterling had a good week. Mixed news on UK house prices was offset by the highest monthly number of mortgage approvals since January last year. Gfk's index of consumer confidence showed a small but welcome and unexpected improvement to a still-negative -30 in September. Despite the media clamour, analysts do not expect the Bank of England to reactivate its asset purchase "money printing" at this week's policy meeting.

[John from Moneycorp]

Hi all - the latest currency update is below - thanks.

AUD: The commodity- and energy-related currencies were at the upper end of the scale for the same reason the US dollar was close to the bottom. The prospect of a resolution to the European debt crisis created a more upbeat market view, dispelling - at least for the moment - the prospect of a Euroland blow-up and a global recession. If recovery looks more assured, China will want more of Australia's ore and coal exports.

GBP: The pound kept company with the safe-haven dollar, yen and franc not because of its AAA credit rating but because investors suspected the Bank of England might embark on another round of quantitative easing. Sure enough, on Thursday the Bank did exactly that, announcing another £75bn of asset sales. The news was temporarily bad for the pound but seemed to have done no long-lasting damage.

NZD: Rugby-related beer sales are contributing to the NZ economy but the world cup has also displaced some of the usual economic activity. The effect of the Canterbury earthquake has at last become positive though. The rebuilding effort has driven business optimism in the area to the highest level in the whole country. On a broader front, business sentiment was muted in the three months to September although firms seemed to be more worried about the general outlook than they were about their own particular business.

USD: Upbeat sentiment among investors carried through the weekend, spoiling their appetite for the safe-haven US dollar and Japanese yen, which were the week's worst performers. A stronger than expected US employment report was also, perversely, negative for the Greenback. The argument there was that a stronger US economy points to a stronger world economy. That meant less reason to stock up with low-risk assets such as the dollar.

EUR: It was an above-average week for agreements to solve the southern European debt crisis. Two of them emerged; one between EU finance ministers to continue lending money to Greece and one between President Sarkozy and Chancellor Merkel to recapitalise European banks. No details were revealed, of course, but this time investors think they might really be serious about solving the problem. The European Central Bank helped things along with a promise to lend unlimited amounts of money to Euroland commercial banks.

CAD: Improved investor optimism was as helpful to the Loonie as it was to the antipodean dollars. A steep -10.4% monthly fall in Canadian building permits was only a temporary hindrance. Otherwise the economic data were robust. The Ivey purchasing managers' index bucked the global downward trend with a six-point improvement to 63.4 in September. There was good news on the employment front too. A net 60.9k jobs were created in September, three time as many as expected.

[John from Moneycorp]

Hi everyone – please find the latest currency updates below – thanks.

AUD: There was a similar feeling of déjà-vu among the "commodity" dollars. Fewer worries meant a greater appetite for the currencies of commodity exporters, especially for those offering an above-average rate of interest. Australia further improved the AUD's position with stronger than expected employment data, including a fall in the rate of unemployment to 5.2%. The overall effect put the Aussie in top place for the week.

GBP: Sterling spent another week in the company of those more famously safe-haven currencies, the US dollar and the yen. The pound dodged the potentially damaging effects of a 15-year high for unemployment but remained in the shadow of the euro. Although grouped at the bottom of the league with the USD and JPY, sterling outperformed both, pulled ahead in the euro's slipstream.

EUR: Europhoria supported the currency for another week. Investors' optimism paid off when it was confirmed that EU leaders will announce a full and final solution to the Euroland debt problem this coming weekend. Although only a broad-brush plan is expected, investors are confident that it will lead to concrete results. As long as that confidence survives the euro will remain buoyant.

USD: It was exactly the same story last week as it had been during the previous seven days. The European Union was preparing a real, concrete, workable plan to sort out its debt crisis, removing a major cause of concern for the global economy. That worry having been removed, investors did not feel the need for safety offered by the US dollar and the yen. For a second week the two safe-haven currencies wore the worst performers

NZD: The Kiwi was close to the top of the table, also driven mainly by renewed optimism about Euroland, but could not keep pace with the Aussie. Not only were there no convenient and helpfully strong statistics from the New Zealand economy, New Zealand's 2.5% benchmark interest rate looks anaemic alongside Australia's 4.75% equivalent. The NZ dollar did not do badly; it just fared less well.

CAD: Of the Commonwealth trio the Loonie came third. Perhaps it was held back by its 1% benchmark interest rate - the lowest of the bunch. Maybe it was the shortage of positive economic data. Either way, the Canadian dollar could not attract as much support as its South Pacific cousins. Canadian economic data were decent enough but not sufficiently so to generate upward traction.

[John from Moneycorp]

The Australian dollar has strengthened after it was reported in the Guardian newspaper that France and Germany were ready to boost the eurozone's rescue fund in a bid to address the public debt crisis.

The markets are very fragile currently, therefore any news is having an impact on currencies – in this case, the suggestion of a solution to the debt crisis sparked interest in the Australian dollar (making it strengthen).

Some positive data was also released which illustrated how the Australian economy will perform over the next few months – this also boosted the Aussie dollar.

[John from Moneycorp]

Hi all – please see the latest updates below – thanks.

AUD: Optimism for an EU debt solution - one which would prevent a return to negative economic growth - kept the Australian dollar afloat last week but was not strong enough to send it to the front of the class. Coming up this week are Australia's inflation data and an RBA interest rate decision. One will undoubtedly influence the other but there is no real expectation that AUD rates will head higher.

GBP: Investors reckon they know exactly where they stand with the Bank of England. Sterling interest rates are not going up. It was therefore with detachment that they greeted last week's news of 5.2% consumer price index inflation in the year to December, a level that matched the record high for the series three years ago. It was not the inflation numbers that kept sterling in the top quartile of major currencies last week, it was its unchallenged AAA credit rating.

EUR: Yet again it was the euro at the centre of attention for the entire week. There was an element of crisis fatigue to it though, with two summit meetings on the agenda; one last weekend and one this coming Wednesday. If, as analysts suspect, France bends to Germany's will it is possible - even likely - that a full and final plan to resolve southern Europe's debt crisis will be outlined this week. Any sign of a fudge, though, and the knives will be out for the euro.

NZD: It is a similar story for the NZ dollar, which pottered along in the wake of the Aussie, neither on the most-wanted list nor on the scrapheap. The RBNZ will have the opportunity on Tuesday to begin reversing the emergency interest rate cut it made in March after the Canterbury earthquake. The chances are loaded towards the central bank not seizing that chance. Preserving the economy is more important.

USD: As one of only two viable alternatives to the single European currency (the other being the Japanese yen) the US dollar depends for its success on investors' dislike of the euro. Over the last fortnight that dislike has been muted by the prospect - valid or not - of a solution to Club Med's debt problems. Expect the US dollar to remain in a holding pattern as long as there is hope that EU leaders will put aside their differences on Wednesday.

CAD: The Canadian dollar's fortunes were more closely tied to those of the US dollar last week than they were to its antipodean cousins. The core rate of inflation jumped from 1.9% to 2.2% but it is unlikely that this will be enough to persuade the Bank of Canada to increase its 1% interest rate target at this week's meeting. As above, the need to preserve the feeble economic recovery outweighs the threat of inflation in most central bankers' minds

[John from Moneycorp]

Hi everyone – please find the latest currency updates below – thanks

AUD: The Aussie has been all over the place in the last three months but has not gone very far. Against the pound it is unchanged from late August. It is looking twitchy though, partly because the Australian economy is looking less bomb-proof than it used to and because house prices are heading lower. Mainly, though, the Aussie slipping because investors worry what will happen if turmoil in Euroland reduces Chinese demand for Australia's coal and iron ore and for the currency itself.

GBP: Sterling remained in the middle of the field, keeping pace with the euro and the Swiss franc. It had to contend with a fall in the inflation rate from 5.2% to 5.0% and an increase in the unemployment rate from 8.1% to 8.3%, both traditionally signals to lighten holding of a currency. The governor of the Bank of England threw some red meat to the bears when he downgraded the forecast for economic growth and hinted there could be another tranche of asset purchases by the Bank once the current budget of £275bn has gone.

EUR: The appointment of unelected governments in Italy and Greece has failed to mollify investors. They might sympathise but have yet to be convinced that economists will make any better fist of sorting out those countries' debt problems than the politicians who went before. When Spain borrowed ten-year money through the sale of ten year bonds last week investors demanded a hefty 6.98% rate of interest. A year ago it would have been 4.72%. The euro needs major action from EU leaders: Instead it is being hung out to dry.

USD: the US dollar was the week's second-best performing currency behind the Japanese yen. The slow-motion train wreck in Euroland is giving investors ample opportunity to prepare for when something nasty happens to the euro. They are taking advantage of the opportunity by stocking up with yen and US dollars. The re-emergence of a deficit crisis in Washington might mean the loss of America's remaining two AAA credit ratings but investors seem unconcerned: triple-A or not, the Greenback is still seen as safer than the euro.

NZD: The New Zealand dollar was not the week's worst performer; that dubious accolade belonged to the South African rand. But it had another bad run. From its highs three months ago the Kiwi is down by 11% against the pound and by 15% against the US dollar. Like the AUD, the NZD is suffering from a lack of confidence that New Zealand's economy would come through the threatened euro zone firestorm unscathed. Investors can only guess how demand for the Kiwi would be affected but they are guessing it would not go up.

CAD: The Canadian dollar had more affinity with the US one than with its antipodean cousins. It was the week's third strongest performer behind the Greenback and the Japanese yen. The economic data helped its case. Canadian manufacturing sales went up by double the proportion analysts had forecast in September. The leading indicator, an amalgam of employment, building permits, stock prices and other forward-looking statistics, also came in twice as strong as expected, albeit only with a 0.2% increase instead of the forecast 0.1%.

[John from Moneycorp]

Hi everyone, please see the latest updates below – thanks.

AUD: An almost total lack of Australian economic data left the Aussie to wander around in the unlikely company of the Swiss franc and Japanese yen. They were accompanied by the Canadian dollar, which also had no place of its own to go. The commodity currencies received a boost early this Monday after the report that the IMF would hand over €600bn to cover Italy's refinancing needs for the next year. It was enough to turn a losing week into a winning one for the Aussie.

GBP: Sterling was far from successful in the week's currency lottery, sharing penultimate place with the South African rand. It did nothing wrong; the UK economic statistics were mostly in line with or better than expectations. The problem was that investors seemed more inclined to buy the euro on good news than sell it on bad. Because they were buying US dollars anyway the pound got the rough end of the stick.

EUR: Rumours and stories of a new and conclusive solution to the Euroland debt crisis came thick and fast: The new Spanish austerity package would make the Spartans look like Barbra Cartland; the jointly-guaranteed "eurobond" project would be revived; the IMF would lend €600bn to Italy. None turned out to be true but collectively they supported the euro. Nevertheless, investors are increasingly reluctant to lend their hard-earned to Euroland governments. They need serious action to stabilise the situation and they need it now.

NZD: Like the AUD, the NZD found itself in the middle of the field after a strange week in which market liquidity was drained by the US holiday and investor's appetite to get involved was hampered by their lack of conviction, especially with regard to the euro. The NZ dollar's big break came this Monday morning when Prime Minister John Key's National Party won the general election by a street. Investors think he will deliver free markets and a balanced budget.

CAD: The Loonie kept company with its antipodean cousins, neither shining nor sinking in mid-league. A 1.0% monthly increase for retail sales in September was twice as strong as expected and therefore positive for the currency, but it served more to nudge than to drive its direction. Had it not been for the Keys election win in New Zealand the Canadian dollar would have come through the week as the commodity currencies' leader.

USD: The failure of a Congressional "supercommittee" to agree on a deficit-reduction programme has not put off investors in US Treasury bills and bonds. They can live with the stalemate because they know America will always repay its debts; it can print as many dollars as it needs. The same is not true of euro zone governments, none of which has the same printing power. Greece or Italy could default; the US cannot.