Tuesday showed the USD failed to 6-week minimum against EUR and JPY on speculation under the successor John Snow on a post of the Secretary of USA Treasury.
Market players fear that new Treasury Secretary can support USD weakening for export stimulation.
The dollar's decline began at the morning after Gerard Baker, a columnist for the London ‘Times” wrote that Donald Evans, Bush's former commerce secretary and a close friend, may succeed Snow. Baker, not specifying the source of such information, pointed Evans can led USD fall.
Wall Street, according to article, prefers to see strong USD but governors and exporters prefer weak currency and as Baker said refer to Evans refer to for the second category.
John Snow who constantly accented the White House adheres to policy of " strong dollar " intends to leave the post by the end of June.
Nevertheless, after midday, the CNBC information that Bush administration chose Henry Paulson the CEO Goldman Sachs Group Inc. prompt pare bets and help dollar to cover it’s losses.
USD is still pressured with awaiting for disappointing economic data which can hint on FED pause in elevation rates policy Federal Funds 25 years диаграмма. Approach to 2004 USD dropped against Euro and JPY for three year. After strengthen in 2005 the rate decrease has renewed. USD against Euro lost nearly 7.7%, against JPY - 5%. This was brought with speculations on possible FED pause. Now key rate is 5%.
Recent report pushed USD bears for extra activity.
Conference Board Consum. Confidence диаграмма highlighted data on Consumer confidence which dropped in May to 103.2 pp. against prior data 109.6 pp. On 1st June ISM reported on it’s estimations in manufacturing ISM manuf. диаграмма. Forecasts data to be under prior 57.3 pp. and makes 55.6 pp. this months.
EUR/USD took the top border of the descending channel in area $1.2850 and reached $1.2880. Before the American session the rate has decreased in area $1.2840. After an output of data on consumer sentiment pressure upon dollar has renewed, as a result the rate broke $1.2900. After insignificant recoil trades closed in area $1.2870.
GBP/USDduring session took a key level of resistance $1.8700. Fastening above the given mark has made possible return of a rate to a former range. As a result the pair has reached $1.8790 before offers were placed on the approach to $1.8800 and message CNBC prompt correction in area $1.8730. During renewal of USD sells the sterling has continued growth and as a result has reached $1.8865. Trades were closed on $1.8835.
USD/JPY broke the important support Y112.00 where there passes the bottom border of the channel ascending from May, 17th and has reached Y111.60. During USD restoration the pair returned above Y112.00 and the American session was stabilized in area Y112.20. The next attempt of testing Y111.60 by success has not crowned and by the end of trades returned above Y112.00.
Investors will focus on today’s FOMC Minutes from 10th May at 1800GMT.
Remind that FED on it’s last meeting has increased refinancing rate already 16 times to 5%. In the accompanying statement FED governors have precisely declared, that the further steps of the Central Bank on interest rates will depend on economic data.
Interest-rate futures show traders are pricing in a 56% chance the FED will elevate rates to 5.25% at a meeting on June 29. The last week showed such possibility in 60%.