The US dollar weakened across the board, hitting one-week lows against the euro. Listless summer trade combined with little news on the US economy this week has caused the dollar to consolidate a rally that had taken it earlier this week to three-month peaks against the euro. A potential positive for the dollar lurked in the week ahead when the Federal Reserve on July 29 announces a policy decision. The generally improving US economy could result in a more upbeat sounding Fed next week. The dollar would stand to gain if the Fed should play up the possibility of an imminent interest rate hike. New Zealand’s kiwi dollar led gains against the greenback after the nation’s central bank underwhelmed with a smaller rate cut to 3 from 3.25 per cent which disappointed a big market contingent that had bet on a bolder cut to 2.75 per cent. The Canadian dollar steadied after closing at its weakest in nearly 11 years.
Sterling
Sterling only managed a small gain against the weaker US dollar after disappointing news on the UK consumer dampened bullishness. Retail sales unexpectedly fell 0.2 per cent in June compared to forecasts of a 0.3 per cent increase. The data introduced the risk that Britain’s Q2 growth on July 28 could stop short of rosy forecasts.
Euro
The euro tested the upper limits of a confined range, touching its strongest in more than a week against the dollar. Bearish sentiment ebbed in news the Greece’s Parliament had approved another strong dose of austerity, the price to win a third bailout of about €85 billion from its lenders and remain in the euro. Eurozone PMI business surveys shed light on the degree to which the Greek crisis has impacted growth.
US dollar
The dollar ran on fewer losses after the best news on America’s job market in decades kept alive prospects for the Fed to move in September. Weekly jobless claims plunged 26,000 to 255,000 the best number since 1973. The report offered the final glance of the job market before the Fed renders a decision on July 29, and being so strong, it increased the chance the Fed’s statement would come across more confident and pave the way for a rate hike as early as September, the month dollar bulls are betting on.