EUR makes advances against weakening USD ahead of key EU meet

EUR makes advances against weakening USD ahead of key EU meet

Sinduja Venkat

Good morning and welcome to today’s foreign exchange market commentary on 20th of May. 

Here are MyCurrencyTransfer.com’s top 5 currency highlights:

  • GBP on bullish outburst
  • EUR advances ahead of EU meet on fiscal integration
  • USD on the defensive, up for extended consolidation
  • Amari says further Yen depreciation could have adverse social effects on Japan
  • Surprise breakthrough for AUD short-lived

CURRENCY RATES OVERVIEW 

GBP/EURO – 1.1827
GBP/USD – 1.5204
GBP/CHF – 1.4725
GBP/CAD – 1.5626
GBP/AUD – 1.5537
GBP/ZAR – 14.3713
GBP/JPY – 155.7676
GBP/HKD – 11.8016
GBP/NZD – 1.8642
GBP/SEK – 10.1311

Mid-market rates as of 2013-05-20 12:46 UTC

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Key releases in the next 24 hours that may affect currency date:

Australia: No Data
Europe: No Data
United Kingdom:  No Data
New Zealand: No Data
United States of America: USD Chicago Fed Nat Activity Index (APR)
China: No Data
Canada: No Data
Japan: JPY Machine Tool Orders (YoY) (APR F)

GBP on bullish outburst

GBP continue on its bullish wave from last week with USD temporarily weakening earlier on. The GBP/USD advanced further to 1.5217, and the pair is expected to scale greater heights in the coming days as the Bank of England (BoE) drops its dovish tone for monetary policy. BoE Governor Mervyn King held an improved outlook for the U.K. as he sees a ‘modest recovery’ in the region, and highlighted a greater willingness to normalize monetary policy as the Funding for Lending Scheme continues to work its way through the real economy.

EUR advances ahead of EU meet on fiscal integration

Euro advanced to heights of 1.2877 against the USD overnight as policy makers in Euro Zone discussed ways to eliminate risk in a euro-area breakup. The EUR looks set to consolidate ahead of the important EU meeting on May 22 as the group pushes for increased fiscal integration. As the governments operating under the Euro currency soften their stance on austerity measures, Bundesbank President Jens Weidmann has continued to argue that France must take additional steps to eliminate its budget deficit.

USD on the defensive, up for extended consolidation

USD is struggling to defend itself on Monday session and market participants predict that the reserve currency will continue its consolidation over this week. Although no major economic reports are due today Chicago Fed President Charles Evans will be making a speech today and it remains to be seen if he too will keep up with the trend of Fed officials negating the possibility for any monetary stimulus being offered.

Amari says further Yen depreciation could have adverse social effects on Japan

Following the start of Sunday evening’s trading session USD fluctuated temporarily dropping by 100 points against the Yen following markets Japan Economy Minister Amari’s comments on recent weakness of the Japanese currency. Amari had indicated earlier that if the Yen made further losses it would impact daily life in Japan adversely and it’s the Japanese government’s job to minimize that.

Surprise breakthrough for AUD short-lived

AUD began its descent on the 12th of April this year against the USD. On May 10th the Aussie saw a surprise jump breaking below the 1.015 level for the first time since June 26th 2012. This breakthrough triggered the leveraged selling of the AUD causing a trade imbalance of currency flows which succeeded in pushing down the AUD further on May 17th.

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