The Euro continued to advance higher against the U.S. Dollar since Monday, despite the fact that European officials still have not reached a deal on a Greek debt solution. The Single Currency is supported by a broadly weaker Dollar and the focus has now turned to important May inflation data coming out from the U.S. today. Retail Sales data for May are expected to fall, adding to a spate of already weak data that has been coming from the U.S., indicating signs of an economic slowdown. After a slight dip in Asia, EURUSD rose back up to as high as 1.4440.
Sterling gained against a weaker Dollar, rising to 1.6426 in anticipation of UK inflation figures later in the day which are expected to show price pressures remaining elevated. However, even if the Pound strengthens after the data, this will be short lived unless the Bank of England looks likely to raise interest rates. Meanwhile, in the U.S. the inflation story is different as US data later today may show retail sales fell and producer-price inflation slowed, adding pressure on the Federal Reserve to keep interest rates low, weighing down the Dollar against the Pound.
The Yen remained low versus the Dollar, with the pair in range most of the session between 80.26 and 80.07. Despite a weaker Dollar, the Yen could not rise after weak data from Japan indicated pessimistic view on manufacturing after the Japanese BSI Manufacturing Index dropped much worse than expected. Meanwhile, Asian stocks extended gains, prompting investors to purchase higher-yielding securities. (stock market movements causes the Yen to move in the other direction).
The Australian dollar benefitted after an array of Chinese reports showed industrial production and retail sales recorded solid growth. China is a major trading partner for Australia. Chinese consumer prices rose to a 5.5 percent annual rate in May, but the figures were close enough to forecasts to provide some reassurance that Beijing did not need to take harsher measures to rein in inflation. AUDUSD rose to its highest level in a week to 1.0646.
Gold rebounded from its three week low reached on Monday adding over $10 to reach highs of $1,521.36 an ounce, lifted by a weaker U.S. Dollar and bargain hunting by jewellers.
Note: Daylight Saving Time is in effect for GMT