Euro Slump Continues Post ECB and Other Top Forex News.
The U.S. dollar continued to climb against the euro on Tuesday, and pulled back from lows against the yen as demand for the greenback continued to be underpinned by higher U.S. Treasury yields.
The yield on the U.S. 10-Year Treasury note climbed to 2.64% on Tuesday, its highest in a month. Treasuries have been buoyed by the release of upbeat economic data from the U.S.
indicating that the economy is shaking off the effects of the harsh winter.
EUR/USD closed the session was down -0.38% at 1.3541, just ahead of last Thursdays four-month low of 1.3502.
The euro sell off continued as borrowing costs in the peripheral euro zone have fallen sharply in the wake of the European Central Bank’s decision last week to implement measures to avert the threat of low inflation in the euro-zone, widening the yields between some euro area government bonds and U.S. Treasuries.
The ECB cut all its main rates to record lows on Thursday and for the first time imposed negative deposit rates on commercial lenders, in a bid to stimulate lending to businesses and stave off the threat of deflation in the region.
Elsewhere, the Japanese yen pared gains against the dollar following the release of Japanese manufacturing data which slipped, as Tertiary Industry Activity and Preliminary Machine Tool Orders softened in May.
USD/JPY closed the session down -0.16% at 102.37, off session lows of 102.22.
While the pound was lower, despite news that manufacturing production in the U.K. rose for a third straight month in April, pushing the annual rate to a three year high.
GBP/USD closed the session down 0.32% at 1.6748.
And the Australian dollar rallied on the back of a stronger Chinese currency and stock market.
AUD/USD closed the session up 0.15% to 0.9369.
In New Zealand the Kiwi recovered from intraday lows amid buying ahead of the NZ Reserve Bank monetary policy statement on Thursday, as traders speculate the central bank could be less dovish than the market is pricing.
NZD/USD closed the session up 0.33% at 0.8522.
Finally, the Canadian dollar edged lower against the dollar as the pair continued to trade in recent narrow range with no fresh economic data to provide investors with direction.
USD/CAD edged up 0.06% to 1.0912.
More coverage of today’s session.
- FT: Keep calm and carry on is the message from currencies. – Keep calm and carry on is the broad message from the currency market thanks to the generous support of central banks.
- MarketWatch: ECB’s Makuch sees room for further easing. – The European Central Bank still has room to ease its benchmark interest rate further, rates are likely to remain low for an extended period, and if additional easing is needed the bank can later opt for quantitative easing, an ECB rate setter said Tuesday.
More Top Stories:
Marc Chandler: Euro sheds more post ECB gains. – The U.S. dollar is mostly little changed against the major currencies. The euro is the main exception. After a halfhearted attempt to push above the $1.3600, the euro has been sold through yesterday’s lows . With positioning assumed to be more balanced after the gyrations in the second half of last week, there is some pressure to retest the low near $1.3500 seen in the knee-jerk reaction to the ECB.
Dean Popplewell: EUR speculators hit the sell button. – Historically, the first full trading day after a U.S. jobs release tends to be the quietest day of the month. Let’s hope that this morning’s forex moves are a good omen despite having to compete with a month of football starting on Thursday.
WSJ: Hong Kong banks help investors bet against Yuan. – As the Chinese yuan has slumped this year, banks in Hong Kong have for the first time begun offering retail customers products that let them bet the currency will keep heading lower.
SMH: Australian dollar back to U.S. parity by end of year, says Morgan Stanley. – The Australian dollar continued to trade steadily in the mid US93¢ range on Tuesday, amid predictions the dollar will reach parity by the end of the year.
TVNZ: NZ dollar trades off lows on buying. – The New Zealand dollar recovered from intraday lows amid buying ahead of the monetary policy statement on Thursday, as traders speculate the central bank could be less dovish than the market is pricing.
Investing.com: U.S. dollar almost unchanged against Canadian dollar. – The U.S. dollar was almost unchanged against the Canadian dollar on Tuesday as the pair continued to trade in recent narrow range with no fresh economic data to provide investors with direction.
Investing.com: Gold futures jump to 2-week high, copper slumps near 5-week low. – Gold prices traded at the highest level in almost two-weeks on Tuesday, but gains were likely to remain limited as investors remained on the sidelines amid a lack of fresh trading cues.