The Euro and sterling strengthened Monday against safe -haven currencies as they were supported by improving global risk sentiment in a volatile trading session following the holidays in the United States.
European stocks and Britain’s FTSE stock index rose on Monday, helped by gains in oil and gas companies. U.S. market closed on Independence Day.
Sterling and the Euro strengthened against the US dollar, Japanese yen and Swiss franc. The Euro strengthened 0.2% to a trading level of 1.0448 against the US dollar, while the Sterling strengthened by 0.44% to a trading level of 1.2148 against the US dollar. The US dollar index, which measures the US dollar against six major currencies, traded down 0.2% to 104.700.
According to Shaun Osborne, head of FX strategy at Scotiabank, trading was calm in the beginning of this week's trading which showed the US dollar weakening against most major currencies ”.
Reports that the White House will announce the easing of some Chinese tariffs later this week in an effort to ease high inflation helped inject confidence back into the market, Osborne added.
Nevertheless, amid concerns of a global recession, the euro remains near a five-year low against the US dollar. The war in Ukraine and the economic downturn, in particular soaring food and energy inflation, have been major obstacles to the Euro, which has weakened 8% against the US dollar this year. The discrepancy between the European Central Bank and the US Federal Reserve’s response to higher inflation has also affected the euro.
Data on Friday showed eurozone inflation soaring to a high reading, adding pressure on the ECB to raise interest rates this month for the first time in a decade. Jeremy Stretch, head of FX G10 strategy at CIBC, said he expects the euro crisis to continue as the ECB prepares to raise rates on July 21 in anticipation of a 25 basis point increase ”.
Markets also focused on the release of minutes from last month’s Fed meeting on Wednesday and U.S. jobs data on Friday.
