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On Friday as investors waited for the U.S. government’s monthly employment report to offer clues to the potential pace of tightening in U.S. monetary policy so,  the dollar was slow versus a basket of major currencies.

November rates Unemployment rates remains unchanged

In November the U.S. economy lost 130,000 jobs, as compared to 190,000 in October, while the November unemployment rate was unchanged at 10.2%. [source : Reuters economist poll]

Rates are anticipated to rise

However traders were uncertain after it has been said by White House spokesman Robert Gibbs on Thursday that it has been signaled by Wednesday’s ADP private sector payroll report that the November unemployment level may tick up.

Canadian Dollar jumped Higher

Meanwhile, after that Canadian jobs figures for November came in far stronger than expected, the Canadian dollar, jumped to a session high.

After that The European Central Bank President Jean-Claude Trichet expressed support for a strong dollar and as he announced small steps toward the withdrawal of extraordinary liquidity measures, the dollar recovered from near 16-month lows against the euro.

European Central Bank President’s Statement

It has been said by Trichet that the euro zone had a “very important stake” in a strong dollar. Euro zone officials have show their concerns about gains for the euro, as it recently hit a 16-month high against the greenback. U.S. trade partners are not willing to see a too rapid depreciation of the US dollar as a cheap dollar affects their exports to the U.S. and endangers economic recovery.

Major Currencies

According to EBS via CQG, in morning trading, the euro was recorded at $1.5077 from $1.5045 late Wednesday.

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As positive euro-zone economic data, easing concern over the Dubai debt crisis and rising global equities helped swing investor sentiment in favor of riskier assets so the dollar declined against the euro on Tuesday.

Dollar against Yen

A surprise overnight meeting of the Bank of Japan helped the dollar capture some ground against the yen, but still the greenback hovered around Y87. This is close to its yearly lows against the Japanese unit.

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On Monday morning in New York the dollar recovered some of its earlier losses as investors continue to fret over Dubai’s debt crisis despite of the United Arab Emirates’ move of providing funds to local banks.

Safe-haven buying supports Greenback

On the day the U.S. currency remains down against most major rivals, while safe-haven buying has once again provided support to the greenback.

As weaker equity prices tend to erode demand for riskier assets, including the euro and other higher-yielding currencies, there are possibilities that the greenback will take further cues from U.S. stocks.

Major Currencies

According to EBS via CQG, in Monday morning trading, the euro was trading at $1.5010, as compared to $1.4955 late Friday.

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On Friday the yen hit a 14-year high against the dollar and it rallied broadly, while the dollar climbed against most other currencies as carry trades and risk exposure were cut down by the investors on concern about Dubai’s debt problems.

Exchange rates recovered in London

However, by mid-session in London, exchange rates had recovered some ground and they were trading in narrower ranges, whereas volatility had eased.

Fears of outright intervention

It has been said by the market sources that the Bank of Japan checked exchange rates earlier in Asian trading with Japanese commercial banks. It has raised fears of outright intervention, although it has been said by the analysts that it has less probability right now.

Dollar against Yen

Before pulling back up to 86.50 yen at 1200 GMT, the dollar dropped down as far as 84.82 yen JPY=, which is its weakest since 1995 and it is ever closer to its record low of 79.75.

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On Thursday the dollar is still rising after midday in Europe. There are currently two factors that are driving this rise in dollar. One is the fear of a debt default by Dubai World and the other is talk of intervention by the Bank of Japan and suspected intervention by the Swiss National Bank.

Dollar reversed from recent sharp fall

This has reversed the dollar’s recent sharp fall which took it down to a 14-year low against the yen during Asian trading as investors continued to worry about how long U.S. interest rates will stay at low levels.

The dollar had shown a drop also due to the reports that Russia is planning to diversify some of its foreign exchange reserves into the Canadian dollar.

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The decision of of whether to buy or sell dollars all depends on how the economy is performing. Investors from all over the world are are attracted towards a strong economy and the reason behind that is the perceived safety and the ability to achieve an acceptable rate of return on investment. Investors are always looking for the highest yield that is predictable or “safe.” Investment from other countries creates a strong capital account and this in  turn results into high demand for dollars.

Factors Affecting Dollar Value

When we are talking about taking a position in the dollar, then it is important for the currency trader to assess the different factors that affect the value of the dollar so that the trader may be able to determine a direction or trend. We can divide that methodology into three groups as follows:

• Supply and demand factors
• Sentiment and market psychology
• Technical factors

As the decline in weekly jobless claims and a rise in personal consumption improved the outlook for the U.S. economy, the dollar fell to a fresh 15-month low against a basket of currencies on Wednesday.

Federal Reserve minutes

Traders had earlier sold the dollar across the board, which results in pushing the dollar to a 10-month low against the yen, as it has been showed by Federal Reserve minutes released on Tuesday that policymakers saw the U.S. currency’s recent decline as “orderly”.

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On Tuesday the euro rise against the dollar, reversing earlier losses as a firmer-than-expected German sentiment survey offset concerns about the country’s banking sector.

Rise in the German Ifo

A bigger-than-expected rise in the German Ifo November business climate index has helped the euro. The index rose to 93.9, a level that has not seen since the collapse of Lehman Brothers last year. This has lifted optimism that Germany’s recovery can gain momentum.

Euro

After falling as low as $1.4889 by 1239 GMT, the euro EUR= was up 0.1% at $1.4975. On Monday it hit a one-week high of $1.5001 but has recently struggled to hold above $1.50.

Traders cited options with a strike price of $1.5000 and $1.5050 which were set to expire later in the day.

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The Canadian dollar has drooped down against 13 of its 16 most-traded counterparts and it has gained only against the currencies of New Zealand, Australia and South Africa. The U.S. dollar has shown a rise against all but two major currencies as investors’ appetite for risk waned.

Canadian currency depreciates

Yesterday in Toronto a depreciation of 1.8 percent to C$1.0706 per U.S. dollar has been recorded for the Canadian currency, from C$1.0516 on Nov. 13. This week it has fell down four straight days, which is the longest losing streak since Sept. 2, and it touched C$1.0733, which is the weakest level since Nov. 9. on Oct. 30 the currency last posted a five-day loss. The buying power of one Canadian dollar is 93.41 U.S. cents.

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