- ‘Turnaround Tuesday’ was a better day for markets with global equity indices reversing much of the sell-off from the start of the week. The FX market was a little calmer than Monday – vols edged lower and major currencies traded within tighter ranges as investors continue to mull over the outlook for the US, where the chances of a recession and an imminent interest rate cut from the Fed remain a possibility. The lack of significant US data this week have been both a hindrance and a source of calm as markets have little on the docket to mull over ahead of next week’s key CPI data.
- The greenback strengthened a tad as markets pared back their expectations of aggressive Fed cuts, with fears of an intra-meeting emergency reduction subsiding. After several days of gains, the Japanese yen lost ground against the greenback, returning to a 146 handle after trading as low as 141.70 on Monday. The move was also attributed to comments from BoJ Deputy Governor Uchida who said that the central bank won’t raise its policy interest rates if financial markets are unstable.
- The firmer US dollar has dropped EURUSD to test the psychological 1.09 area after the pair briefly traded above 1.10 at the start of the week. The single currency also lost some ground after disappointing data yesterday which showed that Retail Sales unexpectedly fell by 0.3% in June versus a rise of 0.5% the previous month.
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