Greece’s Budget Deficit Affects Euro Performance

The euro declined today versus most of the 16 main trade currencies as some of its member countries, specially Greece, are having a hard time to adjust its national accounts, decreasing confidence among investors to inject capital in the region.

Greece’s deteriorating financial situation once again influenced negatively the euro’s outlook as German Chancellor Angela Merkel affirmed that the Southern European budget deficit may hurt the sentiment among investors regarding the common currency, which had been already impacted by Greece’s credit rating when it was downgraded for the second time in a year in late 2009 by Standard and Poor’s. European Central Bank Jean-Claude Trichet also affirmed that the euro’s future remain uncertain, decreasing even further the appeal for the currency, which lost versus the greenback despite weak economic data published today in the United States.

According to analysts, not only Greece, but countries like Portugal, Spain and Italy may threaten the euro’s performance as they also face complicated financial scenarios, with budget deficit’s much beyond the Eurozone members maximum accepted level, which in theory has a limit of 3 percent of gross domestic product.

EUR/USD declined to 1.4478 as of 15:45 GMT from a previous rate of 1.4515 in the intraday comparison. EUR/GBP fell to 0.8878 from 0.8907.

Canadian Dollar Continues to Profit on Commodities

Speculations that demand for commodities will continue to grow in the U.S. and globally are helping the Canadian dollar to benefit from this scenario as exportation of raw materials account for half of the country’s trading revenue.

The Canadian rose against almost all of the 16 main traded currencies as metallic and energetic commodities abundant in the country are experiencing a high demand as the global economic recovery spurs demand for raw materials. Canadian fundamentals are also stronger than most of its main trading partners, and the loonie rose versus the greenback today as U.S. retail sales declined, touching the highest level in three months versus its U.S. counterpart. The loonie also gained considerably versus the euro as several Eurozone member countries are struggling with deteriorating budget deficits.

Brazilian Real Declines on Treasury Plans

The Brazilian real posted the fourth straight day of decline versus the U.S. dollar as speculations suggest that the Treasury is likely to start a debt selling plan to buy dollars, declining attractiveness for the real in currency markets.

The real touched the weakest level in 2010 today as speculations suggest that overseas investors are leaving the country, and such capital outflows declined appeal for the emerging market South American currency. A Treasury plan that may be used to buy dollars also affected the real’s outlook, in another day of losses versus most of the main traded currencies this week.

USD/BRL traded at 1.7658 as of 20:03 GMT from an opening rate of 1.7405.

Australian Dollar Rallies on Interest Rate Outlook

Once again interest rates are fueling a rally for the Aussie dollar as it happened in the second half of the last year, when the South Pacific currency ranked among the best performing options in foreign-exchange markets.

Positive employment data published in Australia this Wednesday is helping the Aussie to rally to high levels versus most of the main traded currencies, as a declining unemployment rate, currently at 5.5 percent and much better than otherkey-economic regions in the world, is fueling speculations that interest rates will be once again hiked in the country next month.

AUD/USD traded at 0.9315 as of 00:11 GMT from a previous intraday rate of 0.9241.

South African Rand Remains Bullish on Dubai Optimism

The South African rand extended gains from last week as concerns regarding Dubai’s debt declined today, providing support for risk fueled traders to purchase assets in emergent markets and commodity linked countries like South Africa.

After the Abu Dhabi financial authority bailed out Dubai with $10 billion, concerns that a major debt disaster involving European banks cooled down today, allowing risk appetite to grow and forcing the greenback down versus the South African rand.

USD/ZAR declined and closed at 7.5150 today from an opening rate of 7.5438.

Dollar Down Slightly on Temporary Risk Appetite

After several days gaining versus most of the 16 main traded currencies, the dollar dropped since risk appetite provided strength for currencies to gain versus the greenback, erasing partially gains earned on previous sessions.

The U.S. dollar had its rally halted today as optimism surged regarding the Dubai financial situation, as its brother Emirate, Abu Dhabi, started a bail out process essential for avoiding chaos in financial markets world wide, fueling traders with optimism and declining attractiveness for the greenback slightly.

EUR/USD traded at 1.4653 from an opening rate yesterday of 1.4624.

Negative Pound Week on Budget Deficit

The pound had a negative week versus the U.S. dollar as the U.K. posted its worst deficit figures since the measurement start, decreasing attractiveness for the British currency which performed positively in the previous week.

A combination of downtrends in European stocks towards the end of this week and a U.K. deficit report who showed the worst figures since 1993, when they were officially initiated, forced the pound down versus the U.S. dollar, the Japanese yen and the European common currency.

GBP/USD closed at 1.6495 this Friday from levels as high as 1.6872 during the week.