Demand for the US Dollar increased dramatically yesterday as poor economic data created a ‘risk-off’ mood in the markets. Despite making impressive starts to the session, Sterling and Euro depreciated as investors turned to the safe-haven Greenback as market sentiment soured. The Euro suffered early on the day as the German ZEW Economic Sentiment Index missed expectations, coming in at 63.3, despite having a forecast of 75.2. The ZEW Economic Sentiment Index measures the level of optimism that analysts have about the expected economic developments over the next 6 months. The latest figure thus shows that confidence surrounding Europe’s biggest economy is at a low. Contributing later in the day to the markets ‘risk-off’ sentiment was the US ISM Non-Manufacturing PMI. With a forecast of 63.4, the actual reading came out at 60.1 – fuelling an aggressive demand for the US Dollar.
Following the public holiday in the US, GBPUSD started the day optimistically, opening at 1.3891. But as demand for the safe-haven Dollar increased, Cable depreciated. GBPUSD finished the day finally at 1.3809, and trades this morning in the 1.37’s.
GBPEUR also made a loss on Tuesday. The pair opened at 1.1690 but was unable to sustain that position, closing at 1.1674 on the day.
Dollar demand also dictated EURUSD. The pair opened the session at 1.1882 but quickly made moves to the downside, closing the day at 1.1829.
The focus for markets today will be the FOMC Meeting Minutes at 19:00. US policymakers surprised investors at June’s meeting with their hawkish stance, and investors are hoping today will give some insight on future potential tapering. Also on the schedule at 07:00 this morning was German Industrial Production for May. Forecasted at 0.5%, the actual reading came out under that figure at -0.3%.