What’s Happening With Currencies – July 21st
The risk trade is on. Buyers in the foreign exchange markets held the major currencies up for the third straight day. The euro gained to trade above 1.4300 – as the British pound continued higher through 1.6200. Greenback gains weren’t even seen against the Japanese yen – as the US dollar index fell by almost 1% to 74.16.
1. The Banco Central do Brasil (Brazil’s central bank) increased rates by 25 basis points to 12.50%. Policy members surprised the market by hinting that this decision may be the last for the year.
2. Singapore dollar gained on the day to trade at a new all time high against the US dollar. The Asian currency traded to as low as 1.2127 in the overnight.
3. Both European manufacturing and services PMI indexes fell below expectations. In July, manufacturing activity fell to an index reading of 50.4 while services activity fell to 51.4. Both numbers were below estimates.
4. European markets, as well as the euro, are trading a bit higher as EU leaders began their two day summit regarding a secondary Greek bailout yesterday. Anticipation is high that a resolution will emerge – as well as plans for a backstop on other potentially negative events in the region.
5. Retail sales in the UK jumped better than expected in June. The measure rose by 0.8%, placing the annualized increase at 0.2%. Previous estimates had sales unchanged for the year.
6. Initial jobless claims disappointed analysts, rising more than expected for the week. Claims rose by 418,000 in the week, beating out expectations for a 408,000 gain.
7. Although manufacturing activity rebounded into positive territory for the Philadelphia region, subindex components still reflect a weak outlook. The regional index jumped to 3.2 in July, bouncing back from a -7.7 reading in June.