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USD
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The U.S. dollar held onto much of its gains from yesterday’s trading and extended its rally versus the British pound and the Japanese yen. Indeed, the U.S. Dollar Index rose for a 13th straight day, the longest run of gains on record as Greek leaders prepare for new elections and as Italian and Spanish bonds rose. Meanwhile, the U.S. economic docket showed that builders in the U.S. broke ground on more homes than anticipated in April. Housing starts rose 2.6% to 717K annual rate, higher than March’s 669K pace that was stronger than previously reported. Later, industrial production is expected to rise to 0.6% in April after stagnating in March. Later today, the Federal Reserve will release its minutes of its April 25-26th policy meeting. Chairman Ben S. Bernanke said after that meeting he’s prepared to “do more” to boost the recovery and ensure inflation remains close to target. Any further hints of possible quantitative easing could stunt the dollar’s gains. |
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EUR
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The euro traded in tight ranges overnight, unable to rebound from yesterday’s slide against its major counterparts. The euro fell yesterday after news broke that Greece would be holding another election to solve their political deadlock, raising concerns the country could be setting the stage for a euro zone divorce. The European Union’s statistics office reported that euro zone inflation slowed last month, falling to 2.6% from 2.7% in March. Exports in Europe fell 0.9%, as the economy continues to struggle amid rising unemployment and stifling budget cuts, preventing prices from increasing. |
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GBP
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The British pound fell to a one-month low overnight after Bank of England Governor Mervyn King reopened the possibility of increasing quantitative easing when saying, “one could make the argument for doing more asset purchases or indeed fewer asset purchases”. King went on to say “the outlook for growth is somewhat weaker than in February”, signaling that additional QE may in fact be the more probable expectation, as the BoE remains ready to respond to euro zone developments and subdued growth. The Office for National Statistics released a report today showing U.K. jobless claims fell again in April, as the unemployment rate contracted to 8.2% from the prior 8.3%. |
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Others
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The greenback continued to march higher against the commodity-based currencies as the price of energy and metals continue to fall. Indeed, the U.S. dollar is currently trading at 5-month highs versus the Australian dollar and the South African rand. |