The dollar dropped marginally in early Asian trading following Monday’s steep falls against major currencies. Reports that President Obama was quoted as saying that the strong dollar was “a problem” at the G7 summit in Germany hurt the greenback, although this was denied by the White House. Asian shares headed lower as growing expectations of a September rate rise in the US following Friday’s strong payroll data hit market sentiment.
Hopes of additional stimulus measures by Chinese authorities were raised after Tuesday’s inflation figures came in below expectations. May CPI rose by 1.2% annually, against forecasts of 1.3% and down from 1.5% in April. Producer prices, which have been falling for the past three years, also came in weaker at -4.6%, versus estimates of -4.5%.
There were signs of compromise in Greece’s latest round of negotiating efforts with its lenders after Greece’s Prime Minister rejected the latest proposals from the EU/IMF last week, labelling it as “absurd”. While European Commission President Jean-Claude Juncker showed exasperation at the Greek side. German Chancellor Angela Merkel said at the G7 summit that time was running out and US President Barack Obama said that Greece needs to make “some tough political choices”.
The latest Greek drama had limited impact on the euro as higher German bund yields on the back of strong German industrial production data lifted the single currency. The weaker dollar also helped the euro advance on Monday but on Tuesday, the greenback attempted to claw back some of those losses in late Asian session.
The euro fell to 1.1285 against the dollar in late Asian trading after hitting a high of 1.1344 earlier, and it was also lower against the pound at 0.7360. The dollar recovered from an earlier low of 124.15 against the yen to rise to 124.45. The pound followed the euro lower against the dollar, dropping to 1.5334. The Australian dollar was unable to make gains on strong business confidence data and fell to 0.7665 against the greenback. Meanwhile, the Turkish lira continued to suffer from the political uncertainty resulting from Sunday’s general election, falling to 2.7546 lira per dollar.
The remainder of the day is looking relatively quiet with UK April trade balance and Eurozone final Q1 GDP figures to be the key data of the day.