Aussie dollar – The Aussie has rallied during early morning New York trade and is heading back towards $1.0500. Sentiment towards the Aussie has suffered markedly during the Greek crisis with investors fretting that its yield advantage is set to evaporate. Within the last month dealers assumed with good reason that the Reserve Bank might continue tightening monetary policy for inflation reasons. The central bank admitted as much recently. However, the actual slowdown in global events as eyes turn to Athens has left the potential for spillover from a possible sovereign default in Europe as a very real possibility. The shift in monetary expectations has been dramatic with investors ditching the Aussie as a result.
Japanese yen – The dollar rose to ¥80.92 in mid-morning European trade remaining bid as risk appetite remains finely balanced. Hopes for a positive outcome in Athens remain and have weighed on the yen. A decline in retail trade during May was less than expected leaving the annual pace of increase at 2.4% while an index of small business confidence rose to 43.1 in June from 37.8. The yen looks about unchanged per euro at ¥115.55 while it advanced per pound to ¥129.12.
Canadian dollar – The Canadian unit weakened earlier in the session before a risk-rally became evident in U.S. equity index futures ahead of the official opening bell. The unit yesterday traded at its weakest in over three-months but today’s weakness was contained by a dip to $1.0116 U.S. cents. The Canadian economic calendar remains quiet until midweek.
Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC
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