The U.S. dollar held relatively flat ranges against most of its trading partners overnight, holding on to its gains from Friday’s close. However, the greenback was able to rally against a number of commodity-based currencies as the price of oil continued to retrace. Indeed, the Canadian dollar touched the lowest level in three months overnight against its American counterpart. The Australian dollar fell to an 11-week low as traders added to bets the Reserve Bank of Australia will lower its interest rates by October, and the Kiwi slid after a government report showed the trade surplus narrowed last month more than economists forecast. Consumer spending in the U.S. unexpectedly stagnated in May as employment prospects dimmed and rising inflation caused Americans to cut back. Personal spending registered at 0.0%, the weakest reading since June 2010. The report also showed incomes increased 0.3% for a second month. The gain was also less than forecast. Tomorrow sees the release of the S&P Case-Shiller home price index and Consumer confidence, followed by MBA Mortgage Applications and Pending home sales on Wednesday. With no major economic data slated for Friday, weekly jobless claims and Chicago PMI will round out the week on Friday.
The Euro strengthened against most of its peers, while holding flat against the U.S. dollar, amid optimism Greece’s parliament will approve austerity measures required to help avert the currency bloc’s first sovereign default. Greek lawmakers will today start debating the 78-billion-euro budget package that officials say is needed to receive a loan payment and future financing. Vittorio Grilli, head of the European Union’s Economic and Finance Committee, med representatives of some of the world’s banks to discuss how private investors can participate in a new rescue. However, if the Greek Parliament fails to pass the budget cuts, the Euro will all but certainly fall to new lows.
The Japanese yen weakened modestly versus the U.S. dollar overnight, but continues to maintain its tight range from the past month. With the pair continuing to ebb and flow with the prevailing risk sentiment, expect the yen to remain in familiar ranges for the foreseeable future.
The British pound rose against most of its rivals, save the U.S. dollar, after a survey showed U.K. business owners expect demand to pick up, prompting investors to pare bets that borrowing costs will remain at a record low for another year. The Lloyds TSB Business Barometer Index for business activity in the next 12 months rose to 46 in June, the highest since May last year. Economic optimism rose to 36 from 14. The pound also found support after the Bank of International Settlements said in an annual report yesterday that central banks need to start raising interest rates to control inflation.
