Published: 10 Sep at 1 PM Tags: Dollar, America, Canadian Dollar, USA, Canada, China, India, Russia, South Africa,
The US Dollar has been on the back foot since last week and the release of disappointing employment data for the worldâ€™s largest economy. With the number of positions increasing by significantly less-than-expected, the likelihood of the Federal Reserve opting to taper stimulus when the Federal Open Market Committee meets this month decreased and the â€˜Greenbackâ€™ weakened in response.
Now, with the prospect of a US strike on Syria dimming in the wake of a Russian bid to get Syria to give up its chemical weapons, safe-haven assets like the US Dollar have lost their appeal and fallen against their higher-risk counterparts.
Following the meeting of the Russian and Syrian Foreign Ministers, the Russian official stated â€˜If the establishment of international control of chemical weapons in the country will help avoid military strikes, we will immediately start working with Damascus.â€™
As one senior currency strategist noted; â€˜Weâ€™ve had this rather out-of-the-blue potential way to avoid the US getting involved in Syria, so that certainly helps risk currencies. The US Dollar has lost some momentum on this potential deal.â€™
The US Dollarâ€™s decline was exacerbated by some positive industrial production and retail sales data from China
, which boosted the global outlook and further reduced the appeal of the US Dollar.
However, while emerging market currencies like the Rupee were able to achieve multi-week highs against the â€˜Greenbackâ€™ the Rand shed gains as a domestic report showed that South Africa
â€™s trade deficit expanded by more than expected in the second quarter.
The Rupeeâ€™s two-week high against the US Dollar was aided by the so called â€˜Rajan effectâ€™ as the influence of the Reserve Bank of India
â€™s new Governor continues to be felt.
With pertinent US economic news thin on the ground today additional â€˜Greenbackâ€™ movement is most likely to occur in response to developments in the Syria situation.
That being said, the US Dollar could decline against its Canadian counterpart if Canada
â€™s housing starts report beats expectations and bolsters the â€˜Loonieâ€™.
As of Tuesday, 10th September 2013, the Pound Sterling currency rates mentioned within this news item were as follows:
GBP USD exchange rate was 1.573, GBP CAD exchange rate was 1.6285, GBP CNY exchange rate was 9.6265, GBP INR exchange rate was 100.6151, GBP RUB exchange rate was 51.9257, and GBP ZAR exchange rate was 15.7171.