Yesterday the U.S. dollar fell versus most major currencies after news broke that former U.S. Treasury Secretary, Lawrence Summers had retired from the race to become the next chairman of the Federal Reserve.
So someone turned down a job - why does that impact USD?
The dollar was weakened by the news, since Summers’ was considered as being likely to unwind economic stimulus measures more aggressively than his main rivals for the post. As such he was likely to reduce the supply of USD and hence it’s price would have increased, furthermore he would have been more likely to introduce interest rises sooner. Investors have therefore sold USD in favour of other currencies.
Such is the focus on the US dollar this week that yesterday ECB President Mario Draghi managed to hold a press conference that barely attracted any press coverage. In what would normally be a market moving statement he told a group of reporters in Berlin, that the economic recovery in the eurozone remains “fragile” and reiterated that interest rates will remain at current or lower levels for an “extended period”. However EUR remained steady versus GBP.
Today sees UK and US Consumer Price (Inflation) data and a key sentiment report in the ZEW Survey from Germany - lets see if these all manage to stay under the radar too.
Posted in Daily Market News on May 30 2014
Yesterday Euro area industrial production data showed a significant drop in July, by 1.5% versus the previous month, sending a negative signal for Q3 GDP growth. However GBP failed to make significant gains on the back of this news with GBP/EUR still hovering below the very significant 1.1900 level.VIEW FULL ARTICLE
Posted in Daily Market News on Sep 13 2013 by alex