Weekly Update

U.S. dollar charting a course for its third consecutive weekly gain against the euro. A decline in stock market prices around the world has evoked heightened risk aversion in the markets, driving investors toward safe havens. This safe haven seeking has been a boon for the U.S. dollar, because despite the economic woes of the United States, U.S. government debt is still trusted more than most other investment vehicles.

The Australian and New Zealand dollars are heading towards a second weekly decline against the U.S> dollar as U.S. stock prices sank to 11-year lows. This and softness in equities around the world has prompted an exodus from the carry trade, dragged commodity prices lower on concerns a slowing global economy will translate into less demand for commodities. The Australian dollar did find some support as the Reserve Bank of Australia intervened in the market, buying Aussie dollars as it approached five year lows against the U.S. dollar.

The Canadian dollar snapped its losing streak, rising for the first time in four days. This could be profit taking as the loonie has been plunging sharply this month, and it is on course to suffer its sixth consecutive monthly drop, which would make this the loonie’s longest losing streak in 15 years. Oil, which accounts for ten percent of Canada’s export revenue, has fallen 65% since July 11, dragging the loonie down with it.

The British pound also gained against the U.S. dollar this morning, and is on track to end the week higher against the greenback than it started. The pound rose almost two percent against the U.S. dollar today. It also eked out gains against the euro, despite indications that the Bank of England is going to continue cutting interest rates.