The dollar came off highs set earlier in the day after strengthening against its peers on thin volume traded as the market took profit following the greenback’s recent upturn while forecasts for a Fed rate increase at some point this year lent further support. The dollar maintained support from yesterday’s data which revealed that US business investment plans rose and consumer confidence and house prices were climbing. Federal Reserve Chair Yellen has stated that if the economy continues on its current trajectory the FOMC will raise its key interest rate later this year.
The euro regained ground against the dollar with the pair coming off its 1 month low of 1.0819 hit earlier in the session. The euro recovered on the back of news that a staff-level agreement between the Greek government and its creditors is being put together which raised optimism that Greece’s reforms will finally be agreed to so that bailout funds can be secured. Greek officials are now hopeful repayment due to the International Monetary Fund by June 5 will not be in default.
The pound weakened against the dollar with the pair down around 0.3% trading at 1.5340 after holding its ground with no significant economic data released out the region today. Tomorrow the market awaits the release of UK total business investment data and revised UK GDP.
The yen weakened against the dollar with the pair surging another big figure setting a session high of 124.07 at nearly an 8 year high. The Bank of Japan released minutes from its latest meeting which revealed that members agreed to delay the target date for reaching an inflation level of 2%. As a result the market suspects the central bank will expand its stimulus program at some point this year.
The Australian and Canadian dollars weakened while the New Zealand dollar strengthened slightly against the greenback. The Aussie dollar came off roughly 0.2% trading at 0.7722 while the kiwi dollar was up 0.1% trading at 0.7236. The Aussie had gained earlier in the session pulling away from its 1 month low overlooking data which revealed that construction activity declined 2.4% in the first quarter. The loonie declined roughly 0.4% against the dollar with the pair trading at 6 week highs of 1.2476 on the back of an announcement from the Bank of Canada which left its key interest rate unchanged at 0.75%. The central bank also stated that there have been no increased risks of deflation since the month prior.
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