The GBP saw another severe sell-off hitting six-month lows against the US dollar. With recent economic data from the UK consistently disappointing traders expect another round of quantitative easing from the Bank of England. The yen gained ground against most of its rivals before a Group of 20 meeting at which officials may debate the currency’s recent declines. Nations are concerned about excess moves in Japan’s currency, following an earlier statement from the G-7. “We can easily expect some criticisms about Japan’s monetary policy at the G-20 and the market remains cautious. The yen is likely to be whipsawed by statements from the US.”

The Canadian dollar regained ground, though keeping well within recent ranges. This was despite Bank of Canada Governor Mark Carney,reiterating that rate hikes are “less imminent,” and indicating that the disappointing pace of business investment at the moment is a risk to the Canadian economy. The loonie gained to a rise in commodity and equity markets, and by the green light being given on Cnooc Ltd’s $15.1 Billion acquisition of Nexen, which is expected to spark heavy demand for Canadian dollars.

The recession across the Europe deepened in the last three months of 2012 as Germany faltered in the face of anemic demand across the debt-ridden region. The economy shrank by 0.6 per cent in the final quarter of 2012 from the previous three-month period. The decline was bigger than the 0.4 per cent drop expected in markets and reps the biggest fall since the first quarter of 2009, its deepest recession since WWII. The zone has now contracted for three straight quarters it’s not alone as Japan is in recession too, and the U.S. economy has shown signs of weakness as well. In Greece and Spain, governments have been aggressively increased taxes and cut spending. Germany, Europe’s biggest economy, shrank by a quarterly rate of 0.6 per cent in the fourth quarter as demand for its exports fell.      

 

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Philip Magnoli- My Freinds call me Don Filippo – The FX Specialist – www.donfilippo.ca