The U.S. Dollar traded mixed against the Forex majors as risk appetite fluctuated in the market as a result of the mounting tensions around the globe. Risk aversion increased days after the shooting of the Malaysian Jet in the eastern region of the Ukraine. The U.S. government has suggested that Russia is at fault for the occurrence, and leaders from the Euro region have intimated they plan to impose further sanctions, reigniting worries that economic sanctions on Moscow could dampen global growth. Speculators have also kept an eye on the volatile situation in Israel, where the ground fighting continues in Gaza. Trading volumes were slightly lower on Monday as the Japanese markets were closed for a national holiday. Safe havens like Gold surged in price as risk aversion rose due to the situations in the Ukraine and the Gaza Strip. Futures for August delivery ticked up 0.35 percent and reached $1,314.00 a troy ounce during the early morning hours in New York. The shiny metal had dipped on Friday by 0.57 percent. The commodity is predicted to extend its rally, especially since sources said that leaders from France, the U.K. and Germany have told Russia’s President, Vladimir Putin that they may impose stricter sanctions this week should the international organizations be denied access to the crash site.
The Euro inched higher against the greenback throughout the weekend, but steadied on Monday as concerns over geopolitical situations bolstered the appeal of safe havens. The shared currency remained under pressure following comments by the European Central Bank’s President, Mario Draghi, who intimated that policy makers may opt for further easing in light of the recent string of lackluster economic data. The Euro also steadied against the Yen. Elsewhere in the Forex, the British Pound slipped against the greenback as demand for safe havens increased on Monday, and as the U.K. reported the second consecutive month of house price declines. But still, the Sterling hovered near a five year high against the U.S. dollar despite speculation that the Real Estate market has begun to slow down. The Sterling traded little changed against the Euro, even though Rightmove Plc confirmed that home prices across England and Wales have declined.
The Yen slipped versus the U.S. Dollar on reports showing that the violence between Israel and Gaza has escalated, prompting the U.N. Security Council to call for an emergency meeting. Investor sentiment leaned towards risk aversion as the relations between Russia and the West appear to be growing tenser, and as international organizations attempt to move ahead with investigations into the shooting of the Malaysian jet.
The New Zealand Dollar edged higher against most of its peers in anticipation of this week when the Reserve Bank is scheduled to meet. Experts anticipate that the central bank may boost the borrowing costs, making it the fourth rate hike of the year. The Australian Dollar traded little changed against the greenback as concerns over the different crises around the world weighed on sentiment.
EUR/USD- France And Germany Warn Russia
The EUR/USD traded flat on Monday while speculators kept an eye on the events unfolding in the Ukraine and the Gaza Strip. The U.S. linked pro-Russian militants to the downing of the Malaysian flight, but Russia has reiterated that the Ukraine should assume responsibility for the tragic event. And as Moscow and Washington continue to argue over who was at fault, a number of countries including France and Germany warned President, Vladimir Putin of the possibility they may impose additional economic sanctions. Other releases revealed that the European Central Bank is monitoring the region’s economy as recent figures denoted the fragile state of its recovery. Mario Draghi, the bank’s President has suggested that further easing may be implemented to avert the possibility of deflation.
GBP/USD- Home Prices Fall Again
The GBP/USD depreciated even though it continued to trade close to the highest rate in five years despite news revealing that the real estate sector has slowed down. And while the release pointed to another decline in home prices, speculators raised speculation that this may not deter the Bank of England from boosting the benchmark interest rate. According to Rightmove Plc., prices across Wales an England plummeted 0.8 percent after rising 0.1 percent in June. Economists have stated that the “famine” has ended. They anticipate that the next reports will confirm the economy expanded for a sixth time in a row; and they believe that Production will show a bigger increase than in 2007 when it peaked. Experts say this could prompt the central bank to say that the “lean years” have come to an end.
USD/JPY- Yen Rallies As Temperatures Rise
The USD/JPY dipped at the start of the week as risk appetite declined in the markets due to the rising tensions in Iraq, the Middle East, Ukraine and Libya. The Japanese monetary unit is anticipated to extend its rally as the U.N.’s Security Council concludes an emergency session. Domestic news indicated that the country is unlikely to see a budget surplus by the year 2020, even if it implements another sales tax hike. And while the monetary unit has inched up 4 percent so far this year, the central bank has suggested that it’s satisfied with the currency’s appreciation. However, many policy makers say that the exchange rate is too high, and for such reason exports have slowed. The USD/JPY declined further on reports that the situation between Israel and Gaza has escalated and the death toll has grown. Sources say that U.S. Secretary John Kerry will arrive in Egypt where he hopes to strike a deal to effectuate a seize fire.
NZD/USD- Reserve Bank Meets This Week
The NZD/USD rallied after sustaining a major drop in the past week. Speculators anticipate that the Reserve Bank of New Zealand could raise the benchmark interest rate, and since the pair has rallied dramatically, it could decline after the announcement. Experts also expect that the central bank could implement some type of measure, given the fact that key commodities have dropped in price, particularly dairy products and logs. Should the currency dip, analysts believe the demand for the Kiwi will decline. The NZD/USD’s gains came to a halt as worries over the numerous intense situations around the globe dampened risk appetite in the Forex.
Today’s Outlook
Today’s economic calendar shows that Japan will report on All Industries Activities. Switzerland will post the Trade Balance. The U.K. will publish data on CBI Industrial Trends Orders. The U.S. will release CPI, Core CPI, Real Earnings, the House Price Index, Existing Home Sales and the Redbook. And Australia will provide metrics on CPI as well as on the Trimmed Mean CPI.