The decline of the US dollar pressed on yesterday, with the dollar index hitting fresh 2-year lows, falling 1% on the day; making it the 7th consecutive day of losses, it’s 2nd worst run in the last decade.
In contrast, its peers continued to make ground against its usually stronger counterpart.
GBPUSD opened the trading week at 1.2815, climbing to 1.2886 at the close.
Although sterling is unable to take much credit here, as it is the weakness of the dollar causing this move, GBPUSD was up 0.8% in day, marking its 7th daily gain as the pair briefly went above the 1.29 level.
As for EURUSD, it started the week strong at 1.1706, and finally closing the day at 1.1751.
GBPEUR in contrast held steady, opening yesterday at 1.0948, closing at 1.0965.
Similarly, with cable, EURUSD is taking advantage of the dollar’s weakness; still riding high from the European Recovery Fund announcement, the pair gained another 1%, reaching 27th month highs against the greenback.
This morning, as the Asian markets begin to close, USD has managed to recover some ground ahead of the Federal Reserve meeting tonight. Following a pullback in Gold prices through the Asian session, dollar buyers emerged and enabled the currency to claw back some of its monumental losses.
As we approach closer to the Fed meeting, closely watched will be the CB Consumer Confidence as it will give the latest indication of progress in the US economic recovery. Also, the pending fiscal package, which is currently deadlocked in congress between the Democrats and Republicans, if approved could uplift the dollar. The deadline for congress extending is unemployment benefits is this Friday.
Although no policy change is expected at the Fed meeting, investors are anticipating reaffirmation of the previously detailed outlook and any indication that there might be a change in emphasis in the forward guidance