Canada’s $ Suffers from ECB

The Canadian dollar rallied today, but was smashed after the European Central Bank press-conference that followed the monetary policy meeting. Forex traders were hoping for the central bank to offer more support to the debt-plagued eurozone countries, but such hopes didn’t materialized.

FX market participants hoped that the ECB would show a willingness to provide more support for the European Union economy. Europe’s central bank indeed take some steps in that direction, lowering the main interest rate by 25 basis points to 1.00 percent and saying that it’s going “to adopt further non-standard measures”. That wasn’t enough, though, and traders were disappointed to hear that the ECB maintained its view that the European governments should bear the weight of rescuing the eurozone themselves.

The disappointment translated to the markets and most commodities slumped. That was bad for Canada as it has a commodity-driven economy and raw materials make up bulk of its exports. Crude oil, the main Canada’s export fell 2.15$ to 98.34$ per barrel on NYMEX, the lowest price since November 28.

USD-CAD rose from 1.0095 to 1.0225 today as of 23:50 GMT, following the earlier drop to 1.0051 - the lowest price since November 01. EUR-CAD jumped from 1.3538 to 1.3643 after falling to 1.3476 - the lowest level since September 19. CAD-JPY slumped from 76.88 to 75.92.

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Rand Tumbles on Negative Fundamentals and Bad News from Europe

The South African rand dropped yesterday and remained weak today on the signs of the nation’s economic weakness. The currency also felt the negative impact of the news from Europe, but the European problems allowed the rand to outperform the euro.

South Africa’s current account deficit widened to 3.8 percent of the gross domestic product in the third quarter, reaching the highest level in 18 months. The increase of the current account shortfall was caused by the slowing manufacturing and the decreasing mining exports. The factory production growth slumped to 1 percent in October from 8.1 percent in September, compared to the market expectations of a 5.7 percent increase.

The negative sentiment, caused by the unwillingness of the European Central Bank to take more responsibility in dealing with the European crisis, added to the downward pressure on the rand. Today’s meeting of the European leaders should be an important junction and may lift the South African currency or hammer it further down, depending on the message the politician will send to markets.

USD-ZAR traded at about 8.2150 today as of 4:00 GMT after it jumped from 7.9850 to 8.2440 yesterday. EUR-ZAR fell from 11.0316 to 10.9991 today.

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UKRAINE Pound Mixed as Cameron Rejects New EURO Deal

The UK pound is mixed today, as economic news is released, and as the latest attempt to save the euro is made. However, Great Britain isn’t pleased about the latest EU treaty, and it will be interesting to see what happens next.

Indeed, the latest change attempt for the eurozone actually involves changes to the wayEuropean Union institutions are used — not just eurozone institutions. And British Prime Minister David Cameron isn’t very happy about them. Indeed, he asked for some exceptions to rules that might have been detrimental to Great Britain, and was rejected.

Some of the impositions require certain budgets, and an agreement that the European Union can override budgets that don’t come up to scratch. British leaders aren’t interested in agreeing to rules that, in their opinions, intrude too far on national sovereignty. However, at this point, only Great Britain remains.

Only 17 of the 27 European Union countries are in the monetary union, all but Great Britain have agreed to the new rules. Could Britain leave the European Union altogether?

At 14:09 GMT GBP/USD is down to 1.5603, down from the open at 1.5634. EUR/GBP is higher at 0.8537, barely up from the open at 0.8535. GBP/CAD is higher at 1.5997, up from the open at 1.5988/ GBP/AUD is also higher at 1.5426, up from the open at 1.5372.

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