The Euro hovered around its highest level in three weeks against the Dollar. After some profit-taking action brought down the pair to 1.4466, it rebounded to peak at 1.4517. The Single Currency is likely to remain supported on expectations of an interest rate hike by the European Central Bank after their meeting on Thursday July 7 as there have recently been strong indications that the Bank will be tightening monetary policy. This interest rate differential will keep Euro above the Dollar, as the US Fed is unlikely to raise interest rates soon.
Cable was pretty much was on the back foot of the EURUSD, following the same pattern. GBPUSD opened Asian trading at 1.6050 heading down to 1.6005 before turning back up to 1.6060. Important economic data from the UK later on Manufacturing PMI will likely cause movements in the Pound.
The Yen fell against most major counterparts overnight, following a series of disappointing economic data. Tankan index , which is the Bank of Japan’s quarterly survey,showed that Japan’s largest manufacturers were more pessimistic about their prospects than economists forecast, giving evidence that the devastating earthquake and tsunami last March may have a more severe impact on business plans than initially thought. Manufacturer sentiment missed the estimate of minus 7 to come out worse at minus 9 compared to a previous reading of plus 6. USDJPY peaked above the previous session high to hit 80.87 before retracing to 80.67.
The Australian Dollar fell for the first time in four days, affected by weak economic data from China which is Australia’s major trading partner. PMI data indicated Chinese manufacturing grew less than forecast, consequently sapping demand for higher-yielding assets such as the Aussie. AUSUSD slowly edged down from the Asian session open price of 1.0720 to reach down to 1.0672.
Gold continued to drop reaching a low of $1,497.03 as fears of a Greece default eased after a vote to pass an austerity bill as successful yesterday, consequently lowering demand for the precious metal as an safe haven investment. As risk appetite picks up, investors move to riskier investments or to equities.
Note: Daylight Saving Time is in effect for GMT