Investing.com – The US dollar traded steady in Europe on Tuesday, while the yen rose in the wake of a suspected government intervention last week.
At 05:40 ET (09:40 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, rose 0.1% to 104.067, bouncing off last week’s low.
Dollar takes a breather
The dollar held steady on Tuesday, with traders appearing to take a breather as they digested the volatile political situation with little economic data ahead of the release of US consumer spending inflation figures for June on Friday.
Vice President Kamala Harris appears to be on track to become the Democratic Party’s presidential candidate, but has yet to be formally nominated.
Yet Republican candidate Donald Trump appeared to be ahead of Biden and Harris last week, data from CBS and HarrisX showed.
Expectations of a Trump presidency have resulted in some dollar strength as analysts said he would likely implement protectionist trade policies.
This week’s key economic data will be released on Friday, with the June index testing market expectations that the Federal Reserve will almost certainly cut rates in September.
Euro lower, ahead of key activity data
In Europe, yields fell 0.2% to 1.0873, ahead of key activity data later in the week.
While economic growth in the eurozone remains sluggish, the strength of the dominant services sector, boosted by tourism, has kept price pressures uncomfortably high.
This posed a challenge for the ECB, so Wednesday’s figures will be closely watched after keeping rates at 3.75% last Thursday and resisting providing future guidance as it was “data dependent”.
The markets are almost expecting two ECB interest rate cuts for the rest of the year.
traded 0.1% lower at 1.2919, falling back from the 1.30 level the pair saw for the first time in a year last week.
The pound has been boosted by the political stability brought about by the Labor Party’s dominant election victory early this month.
However, at the heart of this latest rise in the pound is the belief that it will take longer for British interest rates to fall than elsewhere.
Many major central banks have started cutting rates, with the US Federal Reserve, one of the last, still standing still.
Data from earlier this month showed this remains stubbornly high, pushing the likely start date of the BOE’s rate cutting cycle from August to later in the year.
The yen strengthens ahead of the BOJ meeting
In Asia, yields fell 0.7% to 155.94, not far from Thursday’s five-week low of 155.375, with the yen continuing to strengthen against the dollar after a suspected government intervention last week.
A senior member of the Japanese government called on Tuesday for more clarity on interest rate hikes by the Bank of Japan. The comments come just a week ahead of , where some analysts expect the bank to raise rates by 10 basis points.
rose to 7.2743, remaining close to levels last seen in November.
The currency has been hit by growing uncertainty about the Chinese economy, especially after recent data showed lower-than-expected growth in the second quarter.
