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In early morning trading on Wednesday, the Australian dollar and the euro took off. The euro was trading at $1.2603 in the morning which is an improvement over Tuesday’s $1.2559. Resistance for the euro is seen at $1.2693. This rate is the high that the euro reached at trading on Friday and any amount above this is viewed as unsustainable.
The euro also managed to rise to 100.63 against the yen. Against the Australian dollar, the euro fell to A$1.2235. This marks a four and a half month low against the Australian dollar.
Australian Dollar on the Rise
The Australian dollar is performing well against the markets leading currencies. The Aussie rose to $1.0300 against the United States dollar and 82.18 against the yen. Part of the rise for the Australian dollar is due to the European Central Bank meeting on Thursday. Previously, market analysts believed that the ECB would choose to hold interest rates steady. With weak economic data coming out of Europe and the United States, analysts now believe that the European Central bank will take cut interest rates at its Thursday meeting.
Currency trading was lighter overnight than is normally typical. The thinner liquidity is a result of the holiday occurring in the United States this week. On Wednesday, the Americans will be celebrating their Independence Day and United States markets will be closed. The markets will reopen to the ECB decision on Thursday as well as the United States job report on Friday.
Denmark’s Reserves Reach Record High
During the month of June, foreign reserves in Denmark reached a record high. This rise in foreign reserves came as the Nationalbanken in Demark bought 7.3 billion Danish krone. The total amount of foreign currency reserves are now at DKK511.6 billion. The central bank of Denmark chose to make currency purchases in light of recent events in Europe. Investors are fleeing from the embattled euro and other currencies in Europe.
The lending rate in Demark is currently at a historic low of 0.45 percent. Assets held by the Danish provide stability for the government. Investments in the safe haven have increased after the debt crises in Europe. With such a low interest rate, investors around the world are basically paying the country to keep their money. Nationalbanken is expected to copy any rate decision chosen by the ECB to keep the krone stable.
Emerging Markets Continue to Rise
The greenback is currently trading at 54.21 rupees. This marks a fall of 2.11 percent for the greenback since yesterday’s trading. The Indian rupee is at a seven-week high and is expected to continue to perform well.
In Poland, the central bank is planning on meeting Tuesday and Wednesday to decide on rate adjustments. Analysts believe that the central bank will choose to have a rate increase either this month or in September. The euro is currently trading at 4.1943 zloty which is a 0.5 percent decrease.
For the first time since June 21, the United States dollar fell below 500 Columbian pesos. On Wednesday, the peso hit 494.80 pesos which is a decrease of 1.14 percent. The dollar was also lower against the South African rand. Falling 0.94 percent, the greenback dropped to 8.0814 rand. Part of the rise in the rand’s value can be attributed to the rise in commodity prices.
Bank of England 50 billion Pound Plan
On Thursday, the Bank of England is expected to buy another 50 billion pounds in a round of quantitative easing measures. This is intended to help prop up a weak economy in the United Kingdom ahead of the 2012 London Olympics. The Bank of England has already bought up 325 billion pounds of bonds. Against the United States dollar, sterling was last at 1.5684.
The sterling is currently trading at 0.8014 against the euro which is a drop of 3.8 percent for the year. If the Eurozone crisis deepens, it could spell out a tough few months for the United Kingdom. The nation has already had to deal with a slide back into another recession following the 2008 global crisis. In the United States, the economy is still technically recovering despite the recent economic data coming out of the country.