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Dollar Takes a Breath.

The pound closed in New York yesterday at $1.4754. Cable continued to correct the post FOMC spike high of $1.5155 through Thursday’s session, before getting an added knock lower as traders reacted to Bank of England Haldane’s dovish comments in a speech he gave to a business group in Rutland. A dollar recovery through the US afternoon provided the extra weight to take cable to extended lows. Slow recovery continued through Asian sessions, with the rate able to edge to $1.4776, off a brief dip low of $1.4745. Public sector borrowing provides the domestic data interest at 0930GMT in an otherwise data light day.

The euro is trading firmer against its major counterparts this morning. Later today, traders will keep a tab on Eurozone current account and German producer price inflation data to gauge the strength of the European economy. Yesterday, the European Central Bank announced that banks borrowed EUR 97.8 billion in its third targeted longer-term refinancing operation, signalling that the Eurozone economy is gaining momentum and spurring demand for new loans. The second day of the European summit in Brussels will also be closely tracked as top leaders of the European Union reiterated their tough stance on Greece to provide a list of specific reforms that would improve his country’s balance sheet. Yesterday The euro dropped 2% to $1.0641, but leaving it still above its weakest level against the dollar in more than 12 years.

The dollar eased in Asian trading sessions, but remained well above this week’s lows plumbed after the Federal Reserve’s dovish stance on interest rates sent the greenback tumbling. The dollar’s fell on Wednesday after the Fed cut its inflation outlook and its growth forecast did not alter the long-term view that divergent global monetary policy expectations will bolster the U.S. currency in the months ahead. Against the yen, the dollar edged down about 0.1 percent to 120.72, well above its Wednesday post-Fed low of 119.29 yen. On the U.S. data front on Thursday, the number of Americans filing new claims for unemployment benefits rose only marginally last week, indicating the labour market remained on solid footing. Against a basket of currencies, the dollar fell about 0.3 percent on the day to 98.943, up from Wednesday’s session low of 96.628 but well below a 12-year peak of 100.390 touched a week ago. While market players’ consensus expectation for the U.S. central bank’s interest rate hike have shifted, the overall trend has not. A majority of Wall Street’s top banks now see the Fed holding off until at least September before raising rates, with odds fading for a June hike, a Reuters poll showed. Undermining the greenback, U.S. Treasury yields wallowed not far from multi-week lows struck after the Fed meeting. The yield on benchmark 10-year notes slipped to 1.954 percent in Asian trading from its U.S. close of 1.976 percent on Thursday.

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