Analysis / Daily / Finance / forex

A Moment of Clarity for Dollar Bulls?

One Pound
The pound closed on Friday in New York at $1.4949 after sterling took full advantage of Friday’s sharp reversal in the dollar which saw the rate push up from earlier lows of $1.4722 to a post fix high of $1.4989. UK CBI trends data at 1100GMT provides the UK data interest this morning though most attention will be turned toward Tuesday’s inflation numbers. The comments by Andy Haldane of the Bank of England last week dampened rate hike hopes, as well as opening the prospect for a possible rate cut.

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The euro is trading mixed against its major counterparts this morning. Later today, investors will closely track the meeting between the German chancellor, Angela Merkel, and the Greek prime minister, Alexis Tsipras, in Berlin today as tensions over the Greek debt crisis continue to mount. Tsipras warned Merkel in a letter that it would be “impossible” for Athens to service debt obligations due in the coming weeks if the Eurozone fails to provide any short-term financial assistance to the country. Traders will also keep a tab on Eurozone consumer confidence data as well as on the Bundesbank’s monthly report. At 06:00 GMT, the euro had fallen 0.1% against the USD to trade at $1.0807, while it had risen marginally against the GBP to trade at 1.3814.

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The dollar has started to trade today on the defensive, after a volatile few days in the wake of the Federal Reserve’s dovish comments, which casted doubts on a June rate increase and bullish positions in the greenback. The dollar index eased 0.1 percent to 97.761 on Monday, staying well clear of a 12-year peak of 100.390 set on March 13. The index was nearing the post-Fed meeting trough of 96.628 hit last week when investors moved to price in a later start and a slower pace for U.S rate rises. The greenback stood at 119.820 yen, following Friday’s fall from 121.205. The euro climbed to $1.0833, pulling further away from a 12-year trough of $1.0457 plumbed last week. Traders  expect no big moves today amid a dearth of key economic data. Later, European Central Bank President Mario Draghi will address a European Parliament committee, with Greece and the progress of the ECB’s quantitative easing programme sure to be high on the agenda.

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