The dollar extended its gains in Asian trading on Tuesday following gains made on Monday on the back of the deal between Greece and its creditors. The agreement shifted attention away from euro troubles to the timing of the Fed’s rate hike. The euro dropped below 1.10 dollars as markets remain cautious on whether the Greek parliament will approve all the measures agreed in the bailout deal, including the list of reforms that need to be passed to secure interim financing.
Final German CPI for June had no impact on the euro as the annual rate came in unchanged from flash estimates at 0.3%. The single currency slipped to 1.0984 dollars in late Asian session and was also weaker against sterling at 0.7095. The pound was trading below 1.55 after yesterday’s slump against the dollar and fell further to 1.5462 in Tuesday’s Asian trading.
Shares in Japan were boosted from the Greek deal but Chinese shares gave up earlier gains to head into negative territory, though losses were limited and there were no signs of the sharp losses seen in recent weeks.
The Australian dollar was firmer, rising to 0.7429 against the greenback after the National Bank of Australia Business Confidence index rose to 10 in June from 8 in May. The yen continued to strengthen against European currencies but the dollar reversed an earlier dip to 123.18 yen to rebound to 123.39 yen.
Brent crude oil prices plunged by 3.4% to $56.71 on the news that a deal had been reached by world powers on Iran’s nuclear program. This comes after Saudi Arabia’s announcement on Tuesday that it has increased supply to a record 10.564 million barrels a day in June.
The day ahead is looking relatively busy with a number of key data expected today. UK June inflation data will be closely watched as the Bank of England gets closer to moving towards a rate rise. There will be more on UK inflation as the Bank of England’s MPC members will testify before the Parliament’s Treasury Committee. Eurozone industrial production for May and German ZEW economic sentiment survey for July are also out. While over in the US, retail sales data is likely to get a lot of focus.