Sterling and Euro recently rose against the dollar in a quiet trading session following the 4th of July holiday, even though the global risk sentiments are said to have improved.
The U.S. market remained closed for Independence Day when the market was expecting a light trading day, with most of the currencies getting some ground against the U.S. dollar, which is said to have climbed a high over the past two weeks.
As per reports, euros rose to USD 1.0457 by 0.3%, staying barely above USD 1.0349 in May. Meanwhile, Sterling increased to USD 1.2155 by 0.5% after recently striking a 2-week low at USD 1.1976.
Shaun Osborne, Chief FX strategist at Scotiabank, said that the U.S. dollar has weakened against most important currencies as it unravels the gains of the last trading day while overlooking a moderate risk-off tone in markets.
Reports suggest that the White House will declare lessening of some Chinese tariffs this week for dampening the increasing inflation which may help insert some certainty back into markets, pushing the currencies against the U.S. dollar.
The Swedish crown and New Zealand and Australian dollars rose on Monday after striking two-year lows recently. But following the global recession fears, the euro remained near a five-year low compared to the safe-haven dollar.
The Ukraine war and its economic outcomes, especially the rising food and energy inflation, have been major friction on the euro, weakening 8% this year against the dollar.
The difference between the U.S. Federal Reserve and the European Central Bank leads to higher inflation and weighs on the euro.
Last week’s data demonstrated euro zone inflation making another record, adding an instance for the ECB to raise interest rates this month for the very first time in a decade.
Source Credit – https://www.business-standard.com/article/markets/us-dollar-weakens-against-euro-sterling-in-quiet-trading-session-122070400941_1.html