The US dollar was steady near multi-week highs, fairing solidly, garnering safe haven flows from worries about Greece’s debt crisis while upbeat news on the American economy has also buoyed sentiment. Another month of healthy hiring is expected for June, with unemployment expected to tick down to 5.4 per cent while pay checks are expected to receive a modest bump. The jobs figures will offer some clarity in a complicated outlook for US interest rates. A strong showing by the labour market last month would strengthen the case for the Federal Reserve to raise rates before the end of the current July to September quarter. The euro kept on a vulnerable footing ahead of tomorrow’s vote in Greece over whether the nation should embrace harsher austerity in exchange for more life sustaining loans.
Euro
The euro was steady though on a fragile footing. On the one hand, Greece’s debt crisis has overshadowed rosier US fundamentals, limiting positive traction for the dollar. However, the seemingly neverending Greek crisis has started to take an increasing toll on the euro. The hope is that once Greece’s Sunday referendum comes and goes that Athens and its creditors would quickly hammer out a deal that keeps the debt-choked nation in the euro for the foreseeable future.
Sterling
Sterling kept around its most affordable levels since mid June as disappointing news on Britain’s economy this week threw a wet blanket on expectations the Bank of England might raise interest rates sooner. Moreover, sterling strength has shown signs of holding back Britain’s economy, a trend that if sustained would ultimately delay the timing of a UK rate hike. The Bank of England governor meanwhile said the bank stood ready to lend more help should the Greek crisis spiral out of control.
US dollar
A forecast-undershooting US employment report weighed on the dollar as it seemingly moved the needle to December from September for the Fed to raise interest rates. The latest news on the job market wasn’t as good but it wasn’t disastrous either. Going forward, the dollar may have a little less leeway to the north. The bigger picture remains unchanged with the Fed still likely to raise rates a handful of times over the coming year as ongoing job gains are expected to lead to faster growth.