The USD was up against the majors to begin the week, reversing the greenback’s late Friday losses which occurred in a market with low liquidity. A bond auction by Italy drew decent demand. However, the financially pressured nation is paying its highest rate of interest since the inception of the EUR.
The US dollar saw a mixed trading day today, as positive news boosted risk taking in the marketplace which led to gains for currencies like the euro and British pound. News that the Bank of England will inject an additional 50 billion pounds to support the economic recovery, combined with word that Greece had finally reached an austerity deal, caused investors to shift their funds away from safe-havens. As a result, the EUR/USD …
Euro zone economic data out this morning shows the French and German economies performed in-line or better than consensus forecasts. However, traders need to remember that the data is not forward looking and is most likely already included in the value of the EUR. The was ZEW economic sentiment survey is forward looking and shows German investor confidence tumbled to a 3-year low, further highlighting fears of a euro zone recession.
The US dollar spent much of the day today range trading against most of its main currency rivals, including the euro, British pound and Swiss franc. Traders were hesitant to bet against the greenback ahead of possible news on a Greek debt swap deal. The one exception was against the Japanese yen. The USD/JPY took moderate losses throughout much of the day before stabilizing around 76.80 during the evening session. Turning to tomorrow, …
Successful bond auctions in Spain and France have kept the markets buoyant with Asian equities rallying, though this may be just be markets playing catch up with their American counterparts after yesterday’s rally. European stocks are mixed while the major currencies appear to be consolidating. This is not surprising as we approach some important US data both this afternoon and tomorrow.
Month end fixing may end up being USD positive as banks’ funding costs for USDs continue to rise. Trading in Asia was off to a rocky start with the Heng Seng down 1.80%. The economic calendar is crowded today but investors will continue to focus on the meeting of European finance ministers.
As expected the Bank of England left its interest rate unchanged and did not add to its quantitative easing (QE) program today. The European Central Bank lowered its key refinancing rate by 25 bp. Investors are anticipating additional easing measures to be announced by Mario Draghi during his press conference today at 13:30 GMT.
On Wednesday at 13:00 GMT the Norwegian central bank will meet. Markets have already priced in a 25 bp cut but there may be scope for further easing of monetary policy which would likely weigh on the NOK.
