Finotec

The Dollar fell against the Yen and the Euro as the International Monetary Fund said there are “serious risk” to financial markets from the US housing slump 

After the Dollar had rebounded from Monday’s lows on the late US trading, due to the private Conference Board’s leading indicator index showed a rise of 0.1 percent in April, the Dollar fell against the Yen and the Euro as the International Monetary Fund said there are “serious risk” to financial markets from the US housing slump. The Euro gained today as the German Producer Price Index was revealed at 1.1 percent, above the expectations, which has a positive impact on the currency. The Dollar traded at 1.5596 against the Euro at 7:00am GMT. Also, the Euro was supported by speculation that a report will show German’s investors grew more optimistic in May. The Dollar fell 0.4 percent against the Yen from late US trading on Monday to 103.97 yen. The Dollar’s failure in keeping above the 105 level suggested lingering concerns about the US economy. The Dollar traded at 103.82 against the yen at 7:00am GMT. The Yen gained after the Bank of Japan kept its benchmark rate at 0.5 percent.

The Sterling appreciated against the soft Dollar and slumped versus the strong Euro in the early trading, after a jump in German Producer Price Index reinforced the expectations that the European Central Bank won’t cut interest rates for a while. The British pound traded at 1.9539 against the Dollar and at 0.7972 against the Euro at 7:00am GMT. Investors believe that the Bank of England will continue to cut interest rates this year, despite above-target inflation. The Australian Dollar hit 24-year record high against the US currency, after minutes of the Reserve Bank of Australia’s meeting in May showed it actively considered raiding interest rates as inflation was uncomfortably high. The Australian currency traded at against the Dollar at 7:00am GMT. “The minutes immediately prompted the buying of Australian Dollar against the US Dollar”, said Kenichi Yumoto, senior currency dealer at Societe Generale SA in Tokyo. “This led to dollar-selling against other major currencies.”

Traders believe the German ZEW Economic Sentiment that will be revealed later today may boost the Euro to break the $1.5600 level, if the positive forecast becomes true. Also, important data will be revealed in the US; the Producer Price Index is expected to drop 0.7 percentage points having a negative impact in the Dollar, since it is a leading indicator of consumer inflation. To finish, the WMI Consumer Sentiment will be revealed in Australia, which is forecasted to rise 3.1 percentage points, having a positive effect in the nation’s currency.