The U.S. Dollar traded lower against most of its major counterparts yesterday as expectations for fresh easing measures by world central banks boosted the demand for higher performing assets.
Investors are still awaiting the outcome of the European Central Bank’s policy meeting on Thursday, where EU leaders are to discuss and agree the Interest Decision for the Eurozone. The markets have growing expectations for a rate cut to help bolster growth in the bloc. If this is the outcome we could potentially see Euro weakness, with investors plowing into safer currencies.
In the UK yesterday, data showed that construction activity in the U.K. fell at the fastest rate in two and a half years in June, as output and new orders both fell. The weak data added to speculation that the Bank of England will implement a fresh round of stimulus measures at Thursday’s policy meeting, after data on Monday showed that the U.K. manufacturing sector contracted for a second successive month in June. It is estimated that the BoE could inject £50B into the UK economy which could have a negative effect on the Pound.
Yesterday in the US, official data showed that U.S. factory orders rose by a seasonally adjusted 0.7% in May, above expectations for a 0.2% gain, increasing for the first time in three months, which showed short-term Dollar strength.
In other news, Barclays chief executive Bob Diamond has resigned a week after the bank was fined a record amount for trying to manipulate inter-bank lending rates (£290m to be precise). Mr Diamond said he was stepping down because “the external pressure on the bank risked damaging the franchise”.
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