Daily review – Global currencies – 3 July 2013
July 3, 2013 in Forex Analysis
The dollar continued its rise, reaching a one-month high against most of its major currency counterparts on Wednesday. The greenback climbed to a five-week high against the yen, supported by expectations for positive results on the US Nonfarm payrolls. If data indicates recovery of the labour market, the prospects of the Fed reducing the stimulus measures will increase significantly, which in turn will boost the greenback. Based on these expectations, the dollar gained more than 1% against the yen, trading at 100.071 at the time of writing, slightly lower than its earlier peak at 100.815. Additional support came from the Factory Orders data which reported a 2.1% growth in May.
Meanwhile, the euro fell below the 1.30 level against the dollar in anticipation of the monthly ECB meeting on Thursday. The most traded EUR/USD pair dropped to 1.2933, as market participants expect bank President Mario Draghi to address the economic risks faced by the Eurozone in the short term. More pressure on the single currency came from rising Portuguese bond yields, following the resignation of the country’s Finance Minister.
Elsewhere, the Aussie resumed its downward trend against the dollar, falling to 0.9063 against the dollar at the time of writing. The Reserve Bank ofAustralia left its interest rate unchanged at 2.75% during its meeting yesterday, but Governour Glenn Stevens stressed that the national currency still looks overvalued on the global markets.
The British pound also reported a decrease against the dollar, falling to 1.5137 earlier this morning, before regaining some ground and trading at 1.5205 at the time of writing.
Looking ahead in the day, the Markit Services PMI for June for France, Spain, Italy, Germany and the UK was just released, showing mostly negative readings compared to the Manufacturing PMI earlier this week, which revealed better results. More market volatility is expected to come from the US Employment data and Trade Balance, both due today.
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