Currencies Advance Against US Dollar and Japanese Yen

Posted August 29, 2009

The Canadian dollar advanced against the US dollar as oil prices rose. The euro rose against the US dollar and UK pound as the Euro Zone begins to enter a period of recovery. Brazil’s real fell at a slowing rate against the US dollar.


Canada’s dollar rose more yesterday than it has in 2 weeks when paired with the US dollar.  The loonie has been moving downward this week and the upturn was primarily due to rising stock markets and increasing oil prices.

The loonie rose to 91.87 US cents or C$1.0973.  Oil prices rose to $72.79 per barrel.  Oil is Canada’s largest export and oil price changes have a direct affect on the value of the currency.  Canada is planning on selling C$3 billion of 10 year bonds at auction.  The bonds mature in 2020.

The euro gained against the US dollar and the UK pound.  The Euro Zone is on the verge of beginning recovery from the recession and this is leading to a stronger euro.  The euro advanced to $1.4366 against the US dollar and to 88.24 pence.  The euro also rose against the Japanese yen to 134.57 yen.

The euro’s rise against the pound made the eighth day of advance.  This is the longest period of gain the euro has seen since March 2005.  The advance is attributed to speculation a European report will show an increase in consumer confidence. 

The Japanese yen weakened to 93.66 yen against the US dollar.  It also fell against the New Zealand dollar to 64.28 yen.

Japan is struggling with rising joblessness making recovery difficult.  The rate rose to 5.7 percent in July which is the highest it has been since April 2003.  Consumer prices have fallen by 2.2 percent in the month of July compared to July a year ago.

As signs the recession is ending continue to grow around the world, investors are willing to assume more risk in their investment portfolios.  The dollar fell against the Swiss franc to 1.0581 francs as the US Commerce Department reports inventory growth and rising consumer spending.  The US GDP contracted 1 percent during the second quarter and economist predictions had been that numbers would show a 1.5 percent contraction.

Brazil’s real fell to 1.8668 against the US dollar but this was a rebound from a month low of 1.8887 real.  The real has risen 23 percent in 2009 which makes it one of the best performing currencies among those regularly tracked.

The Columbian peso advanced against the US dollar which is the first time in 4 days.  The peso rose to 2,032.27 pesos per US dollar. Rising oil prices are leading to peso strength. T

The Argentina peso was about the same at 3.8486 pesos per dollar.

The German consumer confidence index rose to a new 15 month high meaning economic recovery is progressing.  Germany unexpectedly emerged from the recession during the second quarter of this year largely due to economic stimulus plans.

People are gaining more confidence the recovery signs are solid and economic pessimism is waning.

The Russian ruble fell against the US dollar to 31.6200 rubles per dollar.  It also fell against the euro to 45.0535 rubles per euro.  Against the currency basket of euros and dollars, the ruble was down to 37.6457. 

The goal is keep the ruble within a currency band of 26 to 41 against the currency basket.

US President Barack Obama re-appointed Ben Bernanke as Chairman of the US Federal Reserve. 

This will be the second term for Bernanke who has been guiding the US through the worse recession seen in decades.  His next major concern will be dealing with the impact of the burgeoning US debt on financial markets.