Wed, July 24, 2024

The dollar rose on Tuesday. What about the other currencies?

The dollar rose on Tuesday. What about the other currencies?

The U.S. dollar climbed up 0.2% higher against a basket of currencies during the last days. It simultaneously rose by roughly the same margin versus the euro to $1.1816. On Tuesday, it held on to small overnight gains as traders weighed whether an accommodative turn from the ECB later this week could hit the common currency. Meanwhile, the Sterling nursed losses due to Brexit uncertainty.

In Asia, the moves were modest, but risk appetite appeared to return to equity markets, and it held the dollar under gentle pressure.

The Australian dollar gained 0.1% to $0.7280, while the New Zealand dollar edged up very slightly from overnight lows. The kiwi plunged after a Sunday’s statement from the central bank, which once again raised the prospect of negative rates.

However, the main focus remained on the European Central Bank’s policy decision, which is due on Thursday. Most analysts expect that the bank’s policy stance won’t change, but they are still looking to the response on its inflation forecasts and whether the ECB seems concerned by the euro’s strength.

Their curiosity is understandable, considering the euro marked a two-year high just above $1.20 at the beginning of the month. But then comments about its level from ECB chief economist Philip Lane pushed it lower.

Kim Mundy, the currency analyst of Commonwealth Bank of Australia, stated that the ECB could raise more worries over a further appreciation in the euro and make some downward revisions to its inflation projections. Meanwhile, the dollar may lift further over the week because of the possibility the ECB takes a sharper dovish turn.

 How did the Japanese Yen fare?

The yen traded at 106.30 per dollar on Tuesday. According to the Cabinet Office data, Japan’s economy shrank an annualized 28.1% in April-June.

The Sterling also tumbled down by 0.8% against the dollar due to a fresh crisis in EU-UK trade negotiations. The pound traded at $1.3162 in Asia, while it sat slightly above a two-week low versus the euro at 89.77 pence.


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