The US dollar index came off session highs set earlier in the day after the dollar had strengthened against its peers. The dollar was pressured following the release of discouraging US data after having been supported by the possibility that the Federal Reserve will increase rates in the near future. Industrial production decreased by 0.2% in May compounding forecasts for a 0.3% increase following a 0.5% decline in April. The Federal Reserve Bank of New York’s general business conditions index dropped from a reading of 3.1 in May to -2.0 in June while experts had forecast an increase to 6.0. Investors are hoping for solid indications to come out of the Fed’s next policy meeting on Wednesday for the timing of a rate increase.
The euro weakened against the dollar with the pair down 0.13% trading at 1.1247. Outlook on the euro was vulnerable following unsuccessful negotiations on economic reforms held with delegates of the European Union and Greek officials which resulted in the market questioning Greece’s euro zone status. More talks due to be held on Thursday are being seen as Greece’s final opportunity to secure a deal to secure bailout funds.
The pound weakened against the dollar with the pair declining 0.10% trading at 1.5541 following Standard & Poor’s lowering of the UK’s sovereign rate to negative territory on Friday. The ratings agency downgraded its outlook following a vote into law that the UK will hold a referendum on its European Union membership by 2017. S&P cautioned that the UK faces a 1 in 3 chance of losing its AAA rating within the next 2 years.
The yen held its ground against the dollar with the pair trading within a tight range of less than 1 big figure with no significant economic data released out of Japan. With no key Japanese data scheduled to be released until Wednesday where investors will see Japan’s trade balance figures, the market seems to be gearing up to the FOMC’s meeting minutes release due the same day.
The Australian and New Zealand dollars strengthened while the Canadian dollar weakened against the greenback. The Aussie dollar added 0.58% against the greenback with the pair trading at 0.7775. The kiwi dollar gained 0.14% against the greenback with the pair trading at 0.6996 coming off its 5 year low of 0.6960 hit earlier in the session. The loonie lost 0.12% against the dollar with the pair trading at 1.2324 following the release of data which revealed that manufacturing sales for Canada declined 2.1% in April. Experts had forecast a 0.5% decrease following a 2.7% rise in March.
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