USD broadly lower against its major rivals

Wednesday, Jun 10 2015

USD fell against its major rivals today. Though there were no major data releases and despite decline in Westpac Consumer Confidence Aussie managed to break decisively above 0.77 handle and is currently being traded few points below 0.7750 level. Reserve Bank of Australia Governor Glenn Stevens, in his speech earlier today, signaled the possibility of further interest rate cuts in the future but added that policymakers should not expect too much from monetary policy, warning that it could lead to "much bigger problems" for the economy.

Sterling came close to 1.55 handle supported by better than forecasted UK Industrial Production figures, that showed 0.4% increase. Yesterday's Trade Balance figures also added momentum, however, regardless of this data it is unlikely that BoE is to rush rate hike given low inflation and weak economic activity.

Furthermore, Moody’s has identified two idiosyncratic risks which could affect the UK’s sovereign rating. Firstly, the referendum on the UK’s EU membership, which may take place even earlier than expected, in the course of next year. While an earlier date would reduce the period of uncertainty, it also reduces the time available for negotiations with the EU on the reforms and repatriation of powers sought by the UK government.

Sentiment on the euro, which is being traded around 1.1280 area, remained fragile as Athens was expected to resume talks on a cash-for-reforms deal with its international lenders later in the day. Greece’s bailout agreement with the European Union and the International Monetary Fund is set to expire at the end of this month and it cannot make further debt repayments without a new deal.

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