FX round-up: Dollar falls after factory data

Date: Wednesday 04 Jul 2012

The dollar ran out of steam against the euro on Tuesday but marked gains against the yen after US factory order data came in stronger than expected.

Figures from the Commerce Department said orders for US factories rose a bigger than expected 0.7% in May. Analysts had forecasts a gain of 0.1%.

Currency trading was lighter than usual on Tuesday with traders reluctant to take new positions ahead of the European Central Bank policy meeting on
Thursday and the US 4 July holiday on Wednesday.

The ECB is widely expected to cut its benchmark interest rate following a string of disappointing Eurozone data and fears of whether recent measures proposed to tackle indebted Eurozone countries will actually work.

The dollar index, which measures the greenback against six major currencies, fetched 81.796 versus 81.888 late Monday.

The euro traded at $1.2607 compared to $1.2583 the previous session and was up 0.71% against the safe haven yen at ¥100.69. The dollar rose to ¥79.86 yen from ¥79.48 on Monday.

Sterling bought $1.5699 compared to $1.5690 on Monday and held steady against the euro despite weak UK construction activity data. Sterling remained within a tight range ahead of Thursday's Bank of England and European Central Bank meetings.

The BOE is expected to recommence its asset purchase programme.


CJ

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