Dollar gains as market awaits ECB

Currencies Direct May 29th 2014 - < 1 minute read

In a lull before the eagerly awaited European Central Bank
meeting next week the USD has made broad gains.  The dollar
index moved to its highest level since early April and the USD
showed gains against the euro and the pound.  The stronger
dollar is being attributed to traders trimming positions ahead of
next Thursday’s ECB decision.  It is still uncertain what
measures the ECB will take next week but the market is expecting
concrete action by the ECB and will be disappointed if it fails to
deliver.  In the run up to the meeting, the euro has shed
ground against its major currency peers as the markets prices in
ECB eases.  The pound has shed gains in recent sessions
despite MPC member Martin Weale commenting in an interview with the
FT that interest rates should rise sooner rather than later. 
Normally this would be pound positive but it seems there is a lack
of appetite to drive the pound higher especially in the run up to
the ECB
meeting.

The Australian dollar rose following encouraging outlook for
Australian business investment.  Although figures showed that
business investment fell, forward looking spending plans were
revised higher improving the outlook and the AUD.

Today is a light data day with the main focus on the second
revision of 1st quarter US GDP.   Initial estimates
showed the economy growing by 0.1 per cent but there is some
speculation that this number could be revised into negative
territory.  Aside from the
GDP
revision we also have initial jobless claims from the
US.  It’s also Ascension day today and many countries in
Europe have a bank holiday which is expected to lead to thinner
trading conditions.


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