Daily review – Global currencies – 10 July 2013
July 10, 2013 in Forex Analysis
Expectations that the Fed will begin reducing its stimulus programme, on one hand, and the British and European central banks tend to further ease their monetary policies, on the other, played a positive role in the dollar’s chart performance, helping it to reach a three-month high against the euro and three-year peak against the sterling.
The British pound plummeted to 1.4831 against the dollar on Tuesday, reaching its lowest level since June 2010. The pressure came from a series of unfavourable UK data which revealed a sharp drop in both industrial and manufacturing productions for the past month and a decrease in the trade balance, as well. Results showed that manufacturing declined on monthly and annual basis, down to -0.8% and -2.9%, respectively, while industrial activity decreased by -2.3%, YoY, and remained flat at 0.0%, MoM. The country’s trade deficit has also widened to £8.491 billion for May. The sterling managed to slightly recover this morning and was trading at 1.4906 at the time of writing.
Meanwhile, the euro fell to a nearly three-year low against the dollar, diving to 1.2771 during yesterday’s trading. A push for the single currency’s drop came from an ECB policymaker Joerg Asmussen, who said that the central bank intends to maintain record-low interest rates for another 12 months. However, the claim was refuted by the ECB later in the day. The euro was also a bit higher this morning, trading at 1.2815 at the time of writing.
Among the other major currency pairs, the USD/JPY reported a slight increase to 101.14, before plummeting to 100.056 this morning. The Australian dollar managed to recover positions against its American counterpart, after earlier this morning it was subjected to a sharp decline and was trading at 0.9206 at the time of writing.
Looking further in the day, investors’ attention will be drawn to the FOMC minutes and Fed’s Ben Bernanke speech.
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