Kantox currency update: dollar weakens on Russian emails affair
The euro advanced towards a fresh 14-month high against the dollar, under pressure the emails of Trump’s eldest son showed new evidence of Russia’s support for the Republican’s presidential campaign.
Furthermore, Federal Reserve Governor, Lael Brainard, warned about hiking rates further with inflation slowing down, casting doubts about the third rate hike of 2017, and adding negative pressure to the dollar.
EUR/US: fresh 14-month highs near 1.1500. The euro advanced further on Tuesday, fuelled by dollar weakness amid Trump’s Russian emails affair, to break above 1.1445, reaching new highs at 1.1490. At London market opening times, the EUR/USD is trading at 1.1460.
GBP/USD retreats below 1.2900. The pound lost ground on Tuesday, to hit two-week lows near 1.2800, with investors disappointed by BoE deputy governor Broadbent’s speech who failed to give any insight about the possibilitu¡y of an interest rate hike over the coming months. At London market opening times, the GBP/USD is trading at 1.2825.
USD/JPY: rejected at 114.50. Dollar rally from mid-June lows at 108.80 was capped yesterday in the area of 114.50 –May’s high- and the pair retreated amid generalised dollar weakness, to levels below 114.00. At London market opening times, the USD/JPY is trading at 113.55
In the Calendar Today
At 08:30 GMT National Statistics will release the UK ILO Unemployment report. With the jobless rate at historical lows, the main focus will be on the average hourly wages to check whether they confirm the view of the BoE that the momentum of UK economy is demanding an interest rate hike.
At 14:00 GMT investors will be attentive to the first session of Fed Yellen’s semi-annual testimony to the congress. The Fed chair is expected to give her view on the U.S. economy and to offer further insight into the Fed’s monetary policy plans. Her comments are likely to increase dollar volatility.
At 14:00 GMT the Bank of Canada will release its monetary policy decision. The BoC is widely expected to hike rates, although the immediate reaction on the Canadian dollar might be limited, as the loonie has been appreciating for the last two weeks, anticipating today’s action.
08:30 GMT UK: ILO Unemployment report (3M) (May)
Prev: 4.6% Cons: 4.6%
08:30 GMT UK Average Hourly Earnings (3M) (May)
Prev: 2.1% Cons: 1.8%
14:00 GMT Fed: Yellen’s testimony
14:00 GMT BoC: Interest rate decision
Prev: 0.5% Cons: 0.75%