The euro (EUR) recovered against the dollar to 1.2585 from 1.2440 supported by a rebound in world equities and hopes that EU leaders are focusing on Greece’s deepening debt crisis and Spain’s banking sector. The European Central Bank decided to keep rates unchanged during yesterday’s monetary policy meeting. ECB President Mario Draghi stressed the downside risks of the economy and also said that ECB stands ready to act signaling the possibility of a rate cut next month.
The US dollar (USD) weakened against a basket of currencies on an improved sentiment in the market. The greenback is also weighed by expectations that the Federal Reserve could embark on a third round of quantitative easing following the recent disappointing nonfarm payrolls figures. Attention shifts to the Fed Chairman Ben Bernanke and its speech before a congressional committee later today where he is expected to give signs over the Fed monetary policy. Versus the safe haven Japanese yen (JPY), the greenback jumped to 79.47 from 78.10 as investors remain cautious that the Bank of Japan may step in the markets to weaken the yen. All eyes turn to the Bank of England interest rate decision where no change in the policy is expected this month.
The Australian dollar (AUD) rose against the dollar to 0.9968 from 0.9764 supported by upbeat employment data. Figures showed an increase of 38.9K of employed people last month comparing to an expected decrease of 5K. Yesterday, the release of the first quarter Gross Domestic Product figures surprised the markets by showing an unexpected 1.3% expansion of the Australian economy. The solid data helped the aussie trade higher towards parity against the greenback on speculation of no for further interest rate cuts.
Oil edged higher to 86.25 dollars a barrel from 83.98. Gold (XAU) dropped to 1612.98 dollars an ounce from 1640.85 and against the euro it slid to 1287.18 from 1298.59. Silver (XAG) edged higher to 29.88 dollars an ounce from 28.49.
