Dollar ends broadly lower as risk appetite returns

Market Review - 08/07/2020  23:44GMT  

Dollar ends broadly lower as risk appetite returns

The greenback went through a volatile session as despite initial gain in Asia and European morning, dollar met renewed selling interest and ended lower across the board on Wednesday as a late rally in U.S. stocks improved risk sentiment.  
  
Versus the Japanese yen, although dollar rebounded from 107.51 in Australia to 107.70 at Asian open, renewed selling emerged and knocked price down to 107.43 in European morning on usd's weakness. The pair then briefly rebounded to 107.60 on cross-selling in jpy before falling to an intra-day low at 107.21 in New York afternoon.  
  
The single currency went through a hectic session. Although price rebounded from 1.1265 at Asian open to 1.1282, the pair then briefly dropped to session lows at 1.1263 at European open on cross-selling in euro before rising to 1.1294. Euro then found renewed buying at 1.1267 in Europe and rallied to an intra-day high at 1.1351 on usd's broad-based weakness before retreating on profit-taking.  
  
Reuters reported the euro zone economy may have shrunk by less than the 13% forecast by the European Central Bank in the three months to the end of June, the ECB Vice President Luis de Guindos said on Wednesday.  
  
The British pound went through a volatile session. Although cable rebounded from 1.2537 at Asian open to 1.2566, then 1.2568 in European morning, price fell to session lows of 1.2509 on cross-selling in sterling. However, the pair then erased intra-day losses and gained to 1.2602 in New York morning as UK Finance Minister Rishi Sunak announced new budget plan and ratcheted higher to a 3-week peak at 1.2623 in New York afternoon before easing.  
  
Reuters reported British finance minister Rishi Sunak said on Wednesday the government would introduce a new jobs retention bonus of 1,000 pounds ($1,255) per employee to encourage businesses to bring back staff they furloughed because of the coronavirus crisis.   
  
He said if employers bring back all 9 million people who have been on furlough, this would be a nine billion pound policy to retain people in work.  
  
In other news, Reuters reported Germany will continue to push to seal a new partnership agreement with Britain by the end of the year but the European Union should prepare for an abrupt split of ties from 2021, Chancellor Angela Merkel said on Wednesday.  
  
Data to be released on Thursday :  
  
UK RICS housing price balance, Japan machinery orders, machine tool orders, China PPI, CPI, Germany exports, imports, trade balance, current account, Canada leading index, housing starts, and U.S. initial jobless claims, continued jobless claims, wholesale inventories, wholesale sales.