Posted December 09, 2009
The New Zealand dollar rose against the US dollar. The New Zealand central bank surprised the market by indicating it could raise interest rates in the near future. The Australian dollar strengthened also against the US dollar. The Canadian currency and the UK pound rose against the US dollar. There was mixed news coming out of Latin America.
The New Zealand dollar strengthened to 72.25 US cents per kiwi. The central bank of New Zealand has indicated an interest rate increase might be in the works. This news has taken the market a bit by surprise because until now there were not clear signs a recovery was well entrenched. But New Zealand monetary policy makers clearly feel that recovery is well on its way.
The interest rate was held at 2.5 percent last Thursday, but now the government is indicating that it may begin exiting stimulus programs by June of 2010 and an interest rate increase would follow. Previously it had been expected that interest rates would not increase until sometime in the third or fourth quarters of next year.
The Australian dollar rose to 91.65 US cents. Australia’s job market is improving and economists predicted a 5,000 job increase, but the actual number came in at 31,200 for November. Australia is the leading developed nation economy right now in terms of emergence from the recession. The strong job numbers prove the resiliency of the Australian economy is a fact.
The euro rose to $1.4738 against the US dollar but the euro is set for a downward trend. There has not been good news coming out of the Euro-Zone the last week. Germany’s manufacturing output is not as high as expected creating market disappointment. Greece recently experienced a debt downgrading. Now Spain’s credit outlook has been changed to negative.
The UK pound rose against to $1.6291 against the US dollar.
The yen fell against the US dollar to 87.85 yen. The yen also fell to 130.02 yen per euro. This is not surprising as investors take on more and more risk at signs the global recovery is inching ahead.
The Canadian currency strengthened against the US dollar and the rise is seen as more of a correction than anything else. The loonie rose to C$1.0548 per US dollar. This is the equivalent of one Canadian dollar being able to purchase 94.81 US cents.
The Columbia peso is back in the news after falling to a one-month low against the US dollar. The slide was attributed to Spain’s credit downgrading. The peso weakened to 2,020.97 pesos per dollar.
The Chile peso strengthened to 500.6 pesos per US dollar. The Argentina peso remained stable at 3.8033 pesos per US dollar. The Peru sol weakened to 2.8765 sols per US dollar. In the unregulated market the Venezuela bolivar rose to 5.8 bolivars per US dollar.
The central bank in Switzerland meets on Thursday this week, but is expected to keep the nation’s interest rate unchanged. The Swiss franc was at 1.0258 francs per US dollar. Against the euro, the franc was at 1.5114 francs per euro.
The Swiss economy is in recovery with the recession ending the third quarter of 2009. The central bank intervened in the currency market starting last March and has bought foreign currencies to drive the franc down. The purchase actions led to a 2 percent decline in the franc against the euro.