USD declined against most of the developed nations peers as investors speculated the US economy didn’t meet second quarter expectations on bad home sales data. Rebound is critical since it will show the economy weathering the 2.9 percent decline of the first quarter even as the full year forecast is cut to a measly 1.7 percent on the huge drop in Q1. As the Federal reserve meets for its monthly policy meeting, USD is declining as the bets of a weaker economy than expected lower the future path of interest rates. USD lost against the Yen, but strengthened against Russian ruble which is weakening on prospects of sanctions. NZD also fell to a six week low.
The risks for the GDP estimate that is due to be announced this week are still to the downside effectively triggering abandonment of some long term positions. USD lost 0.1 percent against the EUR, to $1.3439 per Euro, after it strengthened to $1,3422 per EUR on Friday. It also lost 0.1 percent against Yen, which appreciated to 101.78. Yen was little changed at 136.79 Yen per Euro. Dollar Spot Index by Bloomberg showed 0.1 percent depreciation of the greenback against a basket of weighted 10 developed nations currencies at 1,013.75. The index rose 0.5 percent last week.
CHF and GBP rose the strongest gains the USD appreciating 0.12 percent. Ruble was 1 percent lower and South African Rand lost 0.3 percent. Ruble sank on the news that Obama administration has photo evidence from satellite showing Russians are firing from their side of the border, effectively strengthening the case for sanctions. Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said in e-mailed comments. “The EU’s promise to introduce its severest sanctions ever erases temptations to start buying Russian assets, even at current low levels.” Ruble fell to 35,5995 per USD.
NZD fell on the words by the Graeme Wheeler, the Reserve Bank of New Zealand president who sees NZD as unsustainable appreciated. The Kiwi dollar, as it is known for the endemic bird on the one NZD coin first tumbled to 85.30 per USD to recover to 85.52. On July 30, Kiwi reached 88.36 cents, strongest level since August 2011, when currency started to float.
Chinas currency rose on the report that industrial companies in China managed to improve their profits which rose 17.4 percent on the annual basis. This was twice as much as 8.9 percent in the month before. Yuan advanced 0.1 percent reaching 6.1863 per USD.