The Euro hit a fresh one-month high against the U.S. Dollar after being given a boost by comments from a Greek official who mentioned the Greek parliament is expected to vote on new austerity measures by the end of June, which will allow it to meet a condition imposed by the IMF-EU in order to receive a new bailout. Meanwhile, Eurozone retail sales data were released today indicating an increase to 0.9 percent higher than expected and an improvement from previous month’s decline. The markets are focusing on the next ECB meeting later this week, when it is expected that ECB President Trichet will give a signal of a rate hike in July by mentioning the key words “strong vigilance”. EURUSD peaked at 1.4681 from the open of 1.4611 then pulled-back.
Sterling fell to a one-month low versus the Euro on Tuesday as weak UK retail sales data added to the expectation that the BoE will maintain interest rates unchanged for the foreseeable future, contrasting with hawkish Eurozone rate expectations. EURGBP hit a high of 0.8944. Meanwhile, against the weaker Dollar, the Pound climbed to a seven day high. The broadly weaker greenback which was already battered by last week’s soft U.S. jobs report, suffered another blow today after a Chinese FX official warned of risks in holding excessive amounts of U.S. Dollar assets. GBPUSD rose 118 pips from the open of 1.6353 to 1.6471.
The Swiss Franc hit a fresh record against the weaker US Dollar in European trading, just one pips lower from yesterday’s record. The greenback hit a one-month low against a basket of currencies today after negative comments from a senior official at the Chinese forex regulator warned about the risks of excessive dollar holdings, saying Washington could pursue a policy to weaken the greenback. This painted an already gloomy outlook for the US economy and prompted investors to begin a Dollar sell-off causing USDCHF to drop to a record 0 .8325.
USDJPY was trading in a range with an overall downside, hovering close to the one-month low reached yesterday. Concerns about a faltering U.S. economy, fuelled by much weaker than expected employment data last week, have boosted market expectations for the Federal Reserve to keep interest rates lower for some time. The Yen is generally seen as a safer currency versus the greenback. USDJPY hit lows of 80.15 and highs of 80.32.
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