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    Dollar continues to weaken on potential Fed rate hike delay

    USD

    The dollar fell on Monday after concerns triggered by the recent lacklustre Non-Farm Payrolls data led analysts to speculate the Federal Reserve might hold off from raising interest rates in September as had previously been expected.

    On the data front, ISM Non-Manufacturing Composite was released, and showed a rise to 56.0 in June, from 55.7 previously – however, this was not as high as the rise to 56.7 which was forecast.

    The Labour Market Conditions Index in June fell to 0.8 from 0.9 when it had been forecast to rise to 2.0.

    Services PMI in June came out at 54.8 from 54.8 when it had been forecast to rise to 54.9.

    U.S Composite PMI came out at 54.6 in line with expectations.

    EUR

    The euro recovered after opening lower, following a gap down after the results of the Greek referendum showed a win for the “No” vote, increasing speculation of a Grexit.

    However the currency recovered as the day progressed due to some analysts taking the view that the euro might be stronger if Greece left, despite the possibility of the country defaulting on its debts.

    On the data front German Factory Orders rose by 4.7% yoy in May, beating expectations of 3.8% from a previous 1.3% result in May of the previous year. Month-on-month they fell by -0.2% from 2.2% in April, when they had been forecast to fall by a deeper -0.4%.

    German Construction PMI fell to 50.7 in June. German Retail PMI fell to 54.0 in June. Euro-zone Retail PMI dropped to 50.4 in June. German Retail PMI fell although French and Italian PMI both rose.

    Euro-zone Sentix Investor Confidence rose to 18.5 in July from 17.1 previously when it was expected to fall to 15.0.

    GBP

    The pound rose after a weak start, following a similar course to the euro, which gapped down at the open and then spent most of the rest of the day filling the gap.

    There was no real data out for the pound except Vehicle Registrations which increased by 12.9% yoy in June.

    The pound was affected by contagion fears from a potential Grexit and concerns at how a weakened euro-area might impact negatively on U.K growth.

    Tomorrow sees the release of Industrial Production data for May, which is forecast to rise 1.6%, as well as other data, including Manufacturing Production, which is estimated to rise by 1.8% yoy, as well as the NIESR GDP Estimate in June.

    JPY

    The yen strengthened 22 points on Monday as traders looked for safety after the Greeks voted against the EU bailout. By the second half of the New York session the yen was trading at 122.55 per dollar.

    The Nikkei dropped 1.5% in trading in the Asian session as traders absorbed the potential impact of the Greek “No” vote.

    Early this morning the BOJ governor Haruhiko Kuroda reiterated that the central bank will continue its quantitative and qualitative easing QQE campaign for as long as needed to achieve its 2.0% inflation target in a stable manner.

    In the central bank’s assessment of the domestic regions all regions were either recovering or gradually recovering.

    Moving ahead, market participants look forward to the release of Japan’s Leading economic as well as Coincident indices data, set for release in a few hours.

    USD

    The dollar fell on Monday after concerns triggered by the recent lacklustre Non-Farm Payrolls data led analysts to speculate the Federal Reserve might hold off from raising interest rates in September as had previously been expected.

    On the data front, ISM Non-Manufacturing Composite was released, and showed a rise to 56.0 in June, from 55.7 previously – however, this was not as high as the rise to 56.7 which was forecast.

    The Labour Market Conditions Index in June fell to 0.8 from 0.9 when it had been forecast to rise to 2.0.

    Services PMI in June came out at 54.8 from 54.8 when it had been forecast to rise to 54.9.

    U.S Composite PMI came out at 54.6 in line with expectations.

    EUR

    The euro recovered after opening lower, following a gap down after the results of the Greek referendum showed a win for the “No” vote, increasing speculation of a Grexit.

    However the currency recovered as the day progressed due to some analysts taking the view that the euro might be stronger if Greece left, despite the possibility of the country defaulting on its debts.

    On the data front German Factory Orders rose by 4.7% yoy in May, beating expectations of 3.8% from a previous 1.3% result in May of the previous year. Month-on-month they fell by -0.2% from 2.2% in April, when they had been forecast to fall by a deeper -0.4%.

    German Construction PMI fell to 50.7 in June. German Retail PMI fell to 54.0 in June. Euro-zone Retail PMI dropped to 50.4 in June. German Retail PMI fell although French and Italian PMI both rose.

    Euro-zone Sentix Investor Confidence rose to 18.5 in July from 17.1 previously when it was expected to fall to 15.0.

    GBP

    The pound rose after a weak start, following a similar course to the euro, which gapped down at the open and then spent most of the rest of the day filling the gap.

    There was no real data out for the pound except Vehicle Registrations which increased by 12.9% yoy in June.

    The pound was affected by contagion fears from a potential Grexit and concerns at how a weakened euro-area might impact negatively on U.K growth.

    Tomorrow sees the release of Industrial Production data for May, which is forecast to rise 1.6%, as well as other data, including Manufacturing Production, which is estimated to rise by 1.8% yoy, as well as the NIESR GDP Estimate in June.

    JPY

    The yen strengthened 22 points on Monday as traders looked for safety after the Greeks voted against the EU bailout. By the second half of the New York session the yen was trading at 122.55 per dollar.

    The Nikkei dropped 1.5% in trading in the Asian session as traders absorbed the potential impact of the Greek “No” vote.

    Early this morning the BOJ governor Haruhiko Kuroda reiterated that the central bank will continue its quantitative and qualitative easing QQE campaign for as long as needed to achieve its 2.0% inflation target in a stable manner.

    In the central bank’s assessment of the domestic regions all regions were either recovering or gradually recovering.

    Moving ahead, market participants look forward to the release of Japan’s Leading economic as well as Coincident indices data, set for release in a few hours.


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