This morning the US dollar has weakened a bit after lackluster data releases in the US housing market weighed heavily on an already volatile market Monday. This morning the euro has regained 37 pips to trade at 1.3075. Yesterday against the dollar, the euro was at 1.3038, down 0.55 percent. The euro was down against dollar as global risk appetite was hurt following the sell-off in international commodities, especially gold. The euro is expected to fall further as issue concerning Cyprus has resulted in panic that other debt ridden nations in Euro can also be asked to sell off their gold reserves. The tumble in gold and oil continue to hold market attentions with gold falling the most in one day in 30 years to touch the mid-1350 range and crude oil breaking the psychological price and 90.00 and tumbling through support at 89.00 to trade at 87.97 this morning.
The JPY is trading this morning at 97.38 with the greenback gaining 63 pips. The dollar last traded on Monday at 97.04 yen, down 0.3 percent. The yen is expected to move in a range ahead of the G20 meeting which is likely to raise concerns about the excessive devaluation of the currency to gain competitive advantage in exports.
The dollar index fell to 82.193, down from 82.295 on late Friday. The Japanese yen rose from recent multi-year lows against the dollar and euro, as renewed worries about the global economy spurred traders to sell riskier investments funded by the relatively cheap Japanese currency.
A new political party has been formed in Germany with the sole aim to get the country out of the Euro amid the rising economic burden that Germans share to keep the currency afloat in wake of the ongoing financial crisis in the bloc. European Central Bank President Mario Draghi underscored that his institution is limited in what it can do to help struggling small firms in the euro zone, noting that other central banks that have tried to guide lending to companies have only had limited success. Meanwhile, the European Central Bank on Monday put pressure on governments to push ahead with plans for a closer European integration to address the crisis’ core problems. Undertaking structural reforms, budget consolidation and restoring bank balance sheet health is neither the responsibility nor the mandate of monetary policy.
Sterling was last down 0.2 percent at $1.5306, pulling away from last week’s peak of $1.5412, which was its highest level since Feb. 20, though it held above chart support at its 55-day moving average at $1.5300 and remains flat on Tuesday morning. Bank of England minutes will be released tomorrow as traders look to see if policymakers are leaning any closer to propping up the economy with more quantitative easing (QE), which is usually seen as negative for the pound. But traders said they did not expect sterling to move too much before the release of first quarter gross domestic product figures next week, which will reveal whether or not Britain has avoided recession