There were no tier one data releases during the European session but there was high volatility in the currency markets. Even without a catalyst the US dollar continued to strengthen today and hit a fresh 8-year high versus the yen at 123.76.
The greenback has rallied broadly since mid-May, rising over 4% from 118.88 yen as US economic data began to improve and Fed Chair Janet Yellen signaled the US central bank was on track for raising rates later this year (depending on the data of course).
The firmer dollar coupled with continuing concerns over Greece pushed the euro back below 1.09. The single currency rose early in Europe to 1.0928 early on the back of an upbeat German Gfk consumer climate report but then reversed lower to a fresh 1-month low of 1.0818. It bounced back up to 1.0910 late in the session on some headlines that Greece and its creditors began crafting a staff level agreement for a bailout deal. The June 5 deadline for Greece to make a debt payment to the IMF is fast approaching so a deal before then would bring a sigh of relief to the markets.
Sterling met headwinds at 1.5436 and slid to 1.5320 on broad dollar strength. Focus will turn to Thursday’s UK GDP data. It will be a second estimate of the first quarter’s 0.3% reading. It is expected to be revised up to 0.4% and this would be positive for the pound.
There were no US data releases today with the only economic event of importance being the Bank of Canada rate announcement. As expected the BoC left rates on hold at 0.75%. The greenback edged up to a 6-week high of 1.2483 earlier in the session before slipping on profit-taking but bounced back up after the BoC announcement provided no surprises.