The US Dollar began the new week softer after the G7 Meeting in Istanbul offered no new news and left the translation open for dollar weakness. However, with many strong individual comments in support of the Dollar it may be difficult to be bearish on the buck. In essence, the combination of individual praise and conversely, the side eyed look of consternation could put the Dollar back into familiar grounds where it is sold in a risk rally and bought as risk aversion swoops in. Today saw the former.
EUR/USD opened the week 30 pips higher than Friday's close near 1.4580 on the back of good lip service from the G7. As well, Ireland approving the European Union constitution measure helped to spread warm feeling about buying Euros. Against the Dollar, the Euro did crest just shy of 1.4650, and looked to be comfortable at those levels heading into London. GBP/USD was able to poke above 1.6000 after opening close to 1.5925 for the day. UK PMI is on the horizon later in the London session.
One of the bigger stories of the day was the strength in the Aussie Dollar. The Aussie was kept well bid all session against all counterparties in response to newspaper columns stating that a rate hike of 0.25% looked like a strong possibility for tomorrows RBA Rate decision. Australia's current rate is at an all-time low of 3.0%, which although low for Australia, certainly isn't low in comparison to either the Dollar, 0%-0.20% or the Yen, 0.20%. The end result was that the AUD/USD hit near 0.8750 for a high, completing an almost one big figure gain on the day. The AUD/JPY moves were complementary, as the pair opened near 77.40 and was able to touch 77.60 on a high. AUD/NZD strengthened to 1.5160 as well.
The Yen was weaker on the crosses and against the Dollar as USD/JPY was able to break the 89.90 level on a high. Many traders are waiting to see when the new Japanese Finance Minister Fujii will really draw a line in the sand in regard to yen intervention instead of bellowing the same empty rhetoric about, ...''monitoring excessive and unnatural fluctuations in the currency markets....'' This could be tested if the Yen strengthens closer to the 80.00 level.
