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.