Major Currency Pairs: Euro Falls To More Than 3-Month Low
ICM Brokers | May 29, 2014 06:27AM ET
EUR/USD
The euro fell to a more-than-three-month low against the dollar as German unemployment unexpectedly increased this month and euro-area lending contracted, boosting the case for more European Central Bank stimulus. Europe’s shared currency weakened after a measure of money supply in the 18-nation region, known as M3, grew less than estimates; stoking speculation the ECB will cut interest rates when policy makers meet on June 5. The euro dropped 0.3 percent to 1.3591 after sliding to 1.3589, the least since February 13. Technically, the 18-nation currency fell below 1.3641, the 200-day moving average, for a fourth day. The 14-day relative strength index fell to 27.8, below the 30 level that signals to some traders an asset has declined too far, too fast, and may be due to reverse course. The Euro was traded at 1.3592 dropping from 1.3601 this morning.
GBP/USD
After data yesterday showed mortgage approvals declined in April. The cable fell by 0.6% yesterday to 1.6697, and it was at 1.6815 before that. Today the sterling fluctuate around 1.6710 up to 1.6721, rising from 1.6709. The Bank of England reviews key rates next week. The pound has risen 9.5 percent in the past year as a strengthening U.K. economy boosted speculation BOE Governor Mark Carney will raise rates sooner than policy makers anticipated. The central bank said in its quarterly Inflation Report published on May 14 that while the level of spare capacity in the economy had “narrowed slightly” in the past three months, there “remains scope to make greater inroads into slack before raising” borrowing costs. Officials are set to next announce BOE policy on June 5. Money-market investors see no rate increase from the current record-low 0.5% until after April next year, according to forward rates on the sterling overnight interbank average. That compares with bets for the first increase in March before the inflation report was released.
USD/JPY
The yen is set to snap this month’s advance against the U.S. dollar, amid speculation the Bank of Japan will have to expand monetary easing to ensure it meets an inflation target. Estimates say that the BOJ will boost stimulus by the end of the year. The yen has gained against the greenback this month as BOJ Governor Haruhiko Kuroda refrained from expanding easing even as consumer price growth stalled. The yen traded at 101.63 versus the dollar yesterday, the first gain in seven days, after reaching 15-week high on May 21. The samurai currency was traded at 101.65 during the Asian session today, rising from 101.87.
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USD/CAD
The Canadian dollar gains after yesterday’s 0.2% loss against the greenback; it was traded at 1.0854 as yesterday’s weakest rate, in the first drop during the last five trading days. The Loonie gained about 0.1% during the morning session to be traded at 1.0861, rising from 1.0878. As investors expecting lower Pending home sales data, 3.4% was the growth of March, while the expected for April is 1.1%, indicating lower economic growth.
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