Major Currency Pairs: Dollar Slips Against Euro
ICM Brokers | Jul 08, 2014 03:31AM ET
EUR/USD
The dollar slipped against the euro on Monday after investors locked in gains from Thursday's upbeat U.S. June jobs report and sold the greenback for profits. Many investors jumped to the sidelines to await the release of the minutes from the Federal Reserve's June policy meeting, which may hold clues concerning the direction of monetary policy. Goldman Sachs said it expected the Fed to raise interest rates in the third quarter of 2015 as opposed to the first quarter of 2016 made in an earlier prediction, though uncertainty ahead of the release of the Fed minutes swayed investors away from the dollar. The euro, meanwhile, rose on demand from bargain hunters despite soft German industrial output numbers. Official data showed that German industrial output fell 1.8% in May, the third consecutive monthly decline, defying market calls for a 0.2% expansion.
GBP/USD
The pound remained lower against the U.S. dollar in quiet trade on Monday, but losses were expected to be limited as expectations for the Bank of England to raise interest rates before the end of the year continued to support. Sterling has strengthened broadly since the start of this year, gaining more than 15% against the dollar amid expectations that the deepening U.K. recovery will prompt the BoE to raise rates before the end of the year. Business surveys last week indicated that the U.K. economy continued to grow at a strong pace in the second quarter, after the economy expanded at the fastest annual rate since 2007 in the first three months of 2014. Meanwhile, the dollar remained supported after data late last week showed that the U.S. economy added 288,000 jobs last month, well above expectations for jobs growth of 212,000, while the unemployment rate ticked down to 6.1%, the lowest in almost six years.
USD/JPY
The dollar edged lower against the yen on Monday after investors sold the greenback for profits after applauding last week's robust jobs report and jumped for the sidelines amid U.S. monetary policy uncertainty. The dollar firmed after the Department of Labor reported last week that non-farm payrolls rose by 288,000 in June, easily surpassing expectations for an increase of 212,000. However, by Monday trading after a holiday weekend in the U.S., profit takers wiped out the greenback's advance. Many investors jumped to the sidelines to await the release of the minutes from the Federal Reserve's June policy meeting on Wednesday, which may hold clues concerning the direction of monetary policy. Goldman Sachs said it expected the Fed to raise interest rates in the third quarter of 2015 as opposed to the first quarter of 2016 made in an earlier prediction, though uncertainty ahead of the release of the Fed minutes swayed investors away from the dollar.
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USD/CAD
The U.S. dollar touched session lows against the Canadian dollar on Monday after data showed that Canadian building permits rose at the fastest rate on 10 months in May. The Canadian dollar moved higher after official data showed that the value of building permits issued in May increased 13.8% to C$6.95 billion, well above expectations for a 3.1% increase. The value of building permits issued in April was revised up to 2.2% from the previous estimate of a 1.1% gain. The Canadian dollar rose to six month highs in recent sessions after stronger than expected domestic inflation data for May fuelled expectations that the Bank of Canada could shift away from its neutral stance on interest rates.
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