“Australia’s dollar weakened from the strongest in more than four months after data showedChina’s exports grew less than anticipated, adding to signs of a slowdown in the world’s second-largest economy.

Overseas sales increased 1 percent in July from a year earlier, following an 11.3 percent increase in June, the customs bureau said in a statement today in Beijing. That compared with the median estimate of economists for an 8 percent gain. New Zealand’s kiwi dollar is set for the biggest five-day drop in almost three months as Asian stocks extended losses following the data, sapping demand for riskier assets.”

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“The euro weakened for a fourth day against the dollar as Germany’s economy ministry said the outlook for faster growth was fading amid the currency-bloc’s sovereign-debt crisis.

The greenback and yen strengthened against most of their major counterparts as China’s export growth collapsed, boosting demand for the currencies as havens. The Australian dollar fell against all except one of its 16 major counterparts on concern the slowdown in its top trading partner will deepen. Sweden’s krona fell against the dollar after a central bank official said the Riksbank hadn’t done enough to stimulate the economy.”

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“New Zealand’s unemployment rate unexpectedly rose to a two-year high last quarter, adding to evidence of a weak economic recovery. The local currency retreated and investors increased bets on an interest-rate cut.

The jobless rate gained to 6.8 percent from 6.7 percent in the first quarter, Statistics New Zealand said in a report today in Wellington. The median estimate in a Bloomberg survey was 6.5 percent. Employment dropped by 0.1 percent, or 2,000 jobs, from the first quarter, when it increased 0.4 percent. Economists expected a 0.4 percent advance in second-quarter employment.”

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Growth concerns for Europe have the Euro falling a bit this am. The Euro is currently down 0.0063 @ 1.23 to the dollar.

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“The euro weakened as reports showing declines in German industrial production and exports added to evidence Europe’s sovereign debt crisis is hurting the region’s largest economies.

The 17-nation currency fell against all except one of its 16 major counterparts after Standard & Poor’s lowered its outlook on Greece’s sovereign rating to negative from stable. The pound appreciated for a second day against the dollar and the euro after Bank of England GovernorMervyn King said an interest-rate cut may be counterproductive. Japan’s yen rise.”

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“Australia’s dollar touched its highest level in more than four months after the Reserve Bank keptinterest rates unchanged and said current policy settings are “appropriate.”

The so-called Aussie rose against most major peers after RBA Governor Glenn Stevens and his board said in a statement from Sydney the nation’s growth is close to trend. New Zealand’s currency maintained a three-day gain as Asian stocks extended a global rally, supporting demand for riskier assets.

“I think the RBA hasn’t really set out a case for lowering interest rates, so I suspect that’s probably maybe a surprise to the markets,” said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore. The overall statement “seemed to be quite bullish for the Aussie dollar.”

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Traders are raising options bets that the Euro will fall despite all the commentary that the ECB will ultimately “do what it takes” to save the Euro.

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“Australia’s dollar traded 0.1 percent from the highest in more than four months and government bond yields climbed on bets the Reserve Bank will refrain from lowering the developed world’s highest interest rate tomorrow.

New Zealand’s currency was 0.2 percent from a three-month high as Asian stocks extended a global rally in equities, spurring appetite for higher-yielding assets. Demand for the South Pacific nations’ dollars was tempered before reports tomorrow that may show declines in Italian industrial production and German factory orders, fueling concern Europe’s debt crisis is curbing prospects for growth.”

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After hitting 1.24 we are back to 1.2325

EUR/USD

“Australia’s dollar rose after reports today showed improvement in retail sales and trade, boosting prospects the Reserve Bank will leave borrowing costs unchanged at a meeting next week.

Gains in the so-called Aussie and its New Zealand counterpart were tempered on speculation any measures from European Central Bank policy makers meeting today won’t be enough to resolve the region’s debt crisis. The Federal Reserve yesterday refrained from new action to stimulate the world’s largest economy. The so-called kiwi strengthened after whole- milk powder prices climbed for the first time in six weeks.”

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The Aussie dollar continued to rally on prospects of a central bank put and that Australia will not have to cut rates.

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“The dollar swung between advances and declines against the euro as investors awaited policy decisions from the Federal Reserve and European Central Bank amid mounting evidence that economies around the world are slowing.

The euro pared its gain versus the yen after Bundesbank President Jens Weidmann said that the ECB shouldn’t exceed its mandate. European policy makers announce their next interest- rate decision tomorrow, the first since President Mario Draghi pledged to do whatever it takes to defend the single currency. The pound slid after a report showed U.K. manufacturing shrank the most in more than three years in July, while the yuan fell as a separate report showed Chinese output slowed.”

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Despite a slowing global economy, investors have pulled back on their view that interest rates will  be cut in Australia. This gave the currency a chance to rise.

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Hopium is powerful stuff…….

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A Japanese pension fund which over sees $1.45 Trillion in assets has begun to dump the Yen as the currency has risen 30% since the fall of $LEH. The Japanese central bank is quietly raising their glass in hopes of a weaker currency.

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“Until about four months ago, JKMilne Asset Management invested at least half the money in its global fund outside the U.S. No more. With Europe’s debt crisis intensifying, the Fort Meyers, Florida-based firm with $1.8 billion under management has all its money in dollars.

“It’s been a winning strategy,” John Milne, chief executive officer, said July 26 in a telephone interview. “Given the magnitude of the problem, there was the realization that there was a contagion possibility.”

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The Euro fell in overnight trade on concerns that Spain’s recession is getting deeper. Worries over Spain being able to manage their debt loads helped to weaken the Euro currency.

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“Australia’s dollar slid from the highest level in four months before reports that may show the euro area’s deepening debt crisis is curbing prospects for growth, sapping demand for higher-yielding assets.

The so-called Aussie weakened versus the yen, halting a three-day advance, before a euro-region consumer confidence report today and unemployment data tomorrow. European Central Bank President Mario Draghi and Bundesbank President Jens Weidmann will hold talks in the coming days, two central bank officials said. The Federal Reserve’s rate-setting committee begins a two-day meeting tomorrow, while ECB officials gather for a policy decision on Aug. 2.”

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Merkel and Hollande will hold a phone conference to figure out how to solve Italy and Spain’s debt problems. A report in Europe is suggesting that there will be bond buying by the ECB for the troubled countries. This is largely assumed from yesterday’s comments by Mario Draghi.

So as a result stocks, commodities, the Euro are moving higher.

Euro ,

Merkel and Hollande discussion

Draghi’s comments also helped to boost growth currencies and stocks in  Asia.

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