The U.S. Dollar and the Japanese Yen gained ground yesterday while Euro and other higher-yielding currencies remained on the defensive as it appears that the recent risk rally has run its course and the excitement from China’s new Yuan policy has died off.
The Euro halted its recent decline against the U.S. dollar this morning, rising from a 4-day low just hours before of the Federal Reserve’s key interest rate announcement. The EUR/USD touched on 1.2245 during the early Asian sessions – its lowest since June 17th.
Later today, the U.S Fed is expected to hold its benchmark interest rate near 0%, in what it hopes will be a relatively calm meeting. However, economists do not predict that the Fed will soften its “extending period” language at today’s meeting.
Also out today, the U.S Census Bureau will release the number of new homes sold during May. Analysts predict that the number will fall 19% from 504K to 424K. This key housing figure follows yesterday’s disappointing sales of previously owned homes, which unexpectedly fell 2.2% in May.
Yesterday, Britain’s newly elected government laid out what has been called an “unavoidable budget,” in hopes of reducing the nation’s massive budget deficit. In his speech before parliament, Treasury chief George Osborne unveiled a fiscal tightening plan of new spending cuts, tax hikes and bank levies that will add up to 8% of the U.K’s GDP by 2015-16, representing the deepest cuts in over three decades. The Sterling rose above the 1.48 mark as the UK budget was applauded by many of the world’s rating agencies.
Written by Finexo.com