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The Pound is set to make a second weekly advance against the US Dollar after reaching a seven-month high yesterday. The currency is likely to make further gains today as economists expect the latest UK construction output data to add to signs that the UK economic recovery is picking up momentum.
The ‘Greenback’ halted its declines and made gains against most of its peers ahead of the release of the latest US retail sales data. Economists are expecting the data to show that sales improved in August, adding to signs that the US economy is continuing to strengthen. A positive set of figures is likely to strengthen the Dollar further as investors increase their bets that the Federal Reserve will choose to taper its monetary easing programme next week.
The Euro has edged lower against the US Dollar but remains supported by uncertainty over whether the Federal Reserve will scale back its quantitative easing programme next week which has weighed on demand for the US currency. The only piece of data out today for the Eurozone is the report on the region’s balance of trade. It is expected to rise from €17.3 billion to €20 billion.
The ‘Aussie’ fell against the majority of its most traded peers after data released yesterday showed that the number of jobs in Australia fell unexpectedly. The currency is also being weighed down by a negative outlook for the Australian economy. Economists had called for the number of jobs to rise by 10,000, instead unemployment rose by 11,400.
New Zealand Dollar
The ‘Kiwi’ is on track to make a weekly gain after the New Zealand Reserve Bank said that it will hike interest rates next year. Bank Governor Graeme Wheeler said that he will likely add half a per cent to the current record low level of 2.5%. The currency is likely to weaken next week as the markets turn their attention to the Federal Reserve’s two day policy meeting where it is expected to announce a reduction to its monetary easing policy.
The Canadian Dollar has fallen for the first time in five days after the latest jobs data out of the USA showed that the number of Americans claiming jobless benefits fell to its lowest amount since 2006. The data boosted expectations that the Federal Reserve will choose to start tapering its monetary easing policy next week.
South African Rand
The Rand is holding its ground above the psychologically important R10 to the US Dollar level but is unlikely to make further gains as the markets grow nervous ahead of next week’s Federal Reserve two-day long policy meeting. Investors are unsure whether the American Central Bank will start to scale back its monthly asset purchases, which have resulted in billions of Dollars of cheap money flooding into emerging markets like South Africa’s.