Dollar eases as risk rally builds ahead of Greek vote

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

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

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About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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