A Weak USD Gives An Edge Up To The EUR-JPY-GBP

As the big central bank week begins currency markets are beginning to adjust to the falling US dollar. The dollar is exchanging this morning at 81.67, which is allowing the crosses all to gain momentum. The dollar index, a gauge of the greenback’s movement against six other major currencies, fell 1.14% last week. US dollar languished near 1-month lows against a basket of major currencies, having suffered a setback overnight as investors turned cautious ahead of Federal Reserve policy meeting. The dollar gained a bit of support on Friday after the UoM Consumer Sentiment increased by 1.2 points to 85.1-mark in July as against a rise of 83.9-level in June. Revised UoM Inflation Expectations gained by 3.1 percent in current month from 3.3 percent a month ago.

The euro gained this morning on the weakness of the dollar to trade at 1.3284 up by 6 pips. The euro zone has approved the release of 2.5bn Euros to Greece, as part of its international bailout, ensuring that the debt-ridden country will have a financial lifeline over the summer. Any slippage in Ireland’s austerity targets “would not be well received” by those deciding whether to offer Dublin a post-bailout credit line, the head of the euro zone’s rescue fund said in an interview with the Irish Times. The euro appreciated around 1 percent in the last week on the back of weakness in the DX. Further, favorable economic data from the region supported an upside in the currency. Additionally, upbeat global market sentiments acted as a positive factor. The euro touched a weekly high of 1.3296 and closed at 1.3278 against the dollar on Friday. German Import Prices declined by 0.8 percent in June as against a previous fall of 0.4 percent a month ago. Euro traders will wait until Thursday’s European Central Bank press conference to see what Mr. Draghi has in store.

The surprise of the week was the GBP which is trading this morning at 1.5388 up a bit from Friday’s strong close. The Sterling appreciated around 0.7 percent taking cues from weakness in the DX. Additionally, rise in risk appetite in global market sentiments acted as a positive factor for the currency. Further, rise in the country’s Gross Domestic Product (GDP) data supported an upside in the currency. The Sterling Pound touched a weekly high of 1.5433 and closed at 1.5379 against dollar on Friday. Traders will keep a close eye on the Bank of England meeting on Thursday although no changes are expected.

This morning Japanese retail sales missed their forecast, but still reported much above previous months. The forecast called for an increase of 1.9 percent and the print was 1.6%. The Japanese Yen appreciated around 2.4 percent in the last week on account of political changes in the country. Further, favorable economic data from the country supported an upside in the currency. However, sharp upside in currency was capped as a result of rise in risk appetite in the global market sentiments which led to fall in demand for the currency. The JPY touched a weekly high of 97.94 and closed at 98.25 against dollar on Friday. Japan’s Retail Sales rose by 1.6 percent in June as against a rise of 0.8 percent a month ago. The JPY is trading at 97.84 off by 47 pips this morning as traders await a speech by Bank of Japan Governor Kudora.