Currency Note Worldwide

Commodity backed currencies undermined by the start of US tapering

By Smart Currency December 20th, 2013

Elsewhere this week, global markets focused around the Federal Reserve meeting and the implications of any outcomes. With traders betting on a tapering of US monetary stimulus, the week commenced with the commodity-backed currencies performing badly. The Canadian dollar was trading at 3-year lows, and the Australian dollar weakened as the speculation surrounding the US coincided with further sentiment coming from central bank policy-makers that the Australian currency is overvalued. Post-Fed announcement, an already fragile Japanese yen plunged to five-year lows throughout Wednesday and Thursday. The outlook is fairly grim for the Japanese currency with the US’s more accommodative days are now numbered. Eyes will be on the Reserve Bank of Japan today as policy makers discuss monetary policy strategy. We also saw the Australian and New Zealand dollars being sold off relentlessly overnight Wednesday and into yesterday. Interestingly, the Canadian dollar managed to keep its head above the 3-year lows at which it was trading at the start of the week, despite the Fed’s announcement. Today, other than the Japanese central bank meeting, we have inflation and retail sales figures out of Canada. Get in touch with your trader for a live rate.