Dollar pares gains, sterling rises across the board on Brexit deal hope

Market Review - 07/07/2020  00:05GMT  

Dollar pares gains, sterling rises across the board on Brexit deal hope

Although the greenback rose in Asia and European morning on Tuesday due to active safe-haven usd buying on fear of a second wave of coronavirus pandemic, dollar pared intra-day gains and ended mixed due to rise in sterling on Brexit optimism as well as selloff in the Dow. (Dow ended at 25,890, down 396 points, or -1.51%)  
  
Versus the Japanese yen, although dollar briefly dipped to a 1-week low at 107.25 in Asian morning, price rose to session highs at 107.78 in Europe on active safe-haven usd buying due to second wave coronavirus concern before retreating to 107.51 in New York on renewed usd's weakness together with weakness in the Dow.  
  
Although the single currency rose to session highs at 1.1332 at Asian open, price erased intra-day gains and tumbled to session lows 1.1260 in Europe on usd's broad-based strength. However, the pair then rebounded in tandem with sterling to 1.1307 in New York on renewed dollar's weakness before retreating to 1.1269 near New York closing.  
  
Reuters reported Germany's industrial production rebounded in May, rising by 7.8% on the month after falling by a revised 17.5% in April, the Statistics Office said on Tuesday, in the latest sign that Europe's largest economy is recovering after lockdown.   
  
The British pound went through a hectic session as despite initial strong rebound from 1.2485 in Australia to 1.2517 at Asian open, price retreated to 1.2491 before recovering to 1.2513. However, the pair then dropped to session lows at 1.2463 in Europe on safe-haven buying in usd. Cable then erased intra-day losses and rallied to a 20-day high of 1.2593 (Reuters) on renewed usd's weakness as well as Brexit optimism that an agreement between the European Union and Britain could be made as negotiations resumed. The pair then weakened to 1.2537 on profit-taking.  
  
Reuters reported Britain's chief negotiator David Frost and the European Union's chief negotiator Michel Barnier will have dinner in Number 10 Downing Street later on Tuesday to kick off the latest round of Brexit talks, a spokesman for Prime Minister Boris Johnson said.     "David Frost and Michel Barnier are having dinner at Number 10 this evening for informal talks," said the spokesman. "The dinner tonight kicks off the talks and then tomorrow there'll be teams of officials from the UK and from the EU sitting down having further discussions."   
  
Data to be released on Wednesday :  
  
Japan current account, trade balance, Economy Watchers outlook, Economy Watchers current, Swiss unemployment rate, U.S. MBA mortgage applications and Canada housing starts.