Dollar Suffers Another Hit as China Posts Industrial Growth

The dollar had a week of extremely negative performance hitting several record lows versus most of the main 16 currencies as demand for yield and investors’ confidence rose worldwide, this time, fueled by two reports in China that added to the already growing optimism in trading markets.

Today in Europe, the dollar extended its losses versus the euro as countries like Germany and France are raising attractiveness for assets in the region, as this countries are posting the quickest and most favorable news regarding economic improvements. The British pound also posted significant gains versus the U.S. currency hitting a one month high after producer prices in the United Kingdom climbed for a sixth straight month, suggesting that one of the countries that most suffered with the credit crunch in Europe may be already in a process of recovery, which upgraded the pound’s outlook.

Economists analyze with a certain degree of pessimism the current situation for the U.S. currency. The dollar has been hit massively this week by an outflow of capital towards higher-yielding options, and the sentiment regarding the greenback could not be worse, as most of analysts suggest that the dollar downtrend may proceed further to an undetermined period of time and level, as long as the economic recovery continues.

EUR/USD traded at 1.4591 as of 11:34 GMT from a previous rate of 1.4555 in the intraday comparison. GBP/USD touched 1.6735 from 1.6513.

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Dollar / Canada is falling rapidly after the publication of data on the labor market

Breakthrough of the lower boundary of the consolidation range in dollar / Canada a few days ago has become a very negative signal for the bulls, and while the decline then slowed, the continued weakening of the U.S. currency supported by the persistence of negative mood on the pair. The fall of the dollar index to a fresh yearly lows yesterday allowed the dollar / Canada to break through to C $ 1.0500, as published today, data on the labor market in Canada have to be that impetus for further growth of the Canadian currency, which has been waiting for many bulls on it. Growth in employment of 30 600 jobs six times surpassed analysts' expectations, while the drop in the unemployment rate from 8.7% to 8.4% in September also proved to be a pleasant surprise, and now the dollar / Canada holds about C $ 1.0440. Option barriers at C $ 1.0450 have been passed, and now hold only a couple of drop bids around C $ 1.0440/30, break below which will open the way to C $ 1.0400. Meanwhile, dealers noted that in general the dollar / Canada looks like propensity to fall in the direction of C $ 1.03.