The euro and Japanese yen recorded slightly higher against the dollar on Tuesday morning. Both rose by 0.1 percent to 1.1885 and 109.16 respectively.
JPMorgan’s currency strategists explained the dollar weakness through the combination of persistent concerns about the coronavirus Delta variant, uncertainty surrounding China’s regulatory drive, and the expectation that the Federal Reserve will only slow down its monetary easing very gradually.
On the macroeconomic level, there is little that can set the foreign exchange markets in motion on Tuesday. This afternoon the American factory orders from June will appear.
It was announced this morning that producer prices in the euro area increased even more in June. On a monthly basis, there was an increase of 1.4%, compared to 1.3% in May.
The Australian dollar rose 0.3 percent against the US dollar at 0.7387 after the Central bank of Australia’s interest rate decision. The Reserve Bank of Australia decided on Tuesday that it will reduce its bond buyouts starting in September.
The announcement was a’ hawkish ‘ surprise for market experts, as it was expected that the central bank would postpone it due to the economic impact of new lockdowns in Australia. However, the RBA expects the economy to recover quickly from the last coronavirus wave.
On Tuesday morning, the British pound was slightly higher than the euro and the dollar at 0.8543 and 1.3910 respectively. Later this week, the Bank of England will issue its interest rate decision. Fireworks are not expected here.
The members of the monetary policy committee seem to be still divided as to the nature of the recent inflation peak, and some of the concerns around the delta straain in the background, we will probably be meeting in September.
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