Steady Dollar Before FED Minutes On Wednesday

The Dollar held steady on Monday as investors refrained from bets on the currency before the publication of the US Federal Reserves (FED) minutes on Wednesday. It is expected that the minutes might give a more clear indication on the pace and timing of FED’s plan to trim its bond buying program. Analyst consensus is that tapering could start in September. The Dollar index, DXY, was flat.  EUR/USD trades at 1.3348  and USD/JPY is at 97.97.

Higher yields on Dollar denominated bonds have made the Dollar more attractive over the last few days, but this has been blunted by a promising improvement in the Euro zone and UK economies which have underpinned the Euro and Sterling.  Data last week showed that both the German and French economies were growing faster than expected in the second quarter.  EU manufacturing and services data are going to be published on Wednesday and give a more clear indication as to whether the Euro zone is pulling out of recession.

The data will have an impact on the strength of the Euro, which is expected to falter against the Dollar in the upcoming trading sessions. That could mean that Dollar would start to attract demand against the Euro.  The Dollar might also be in for a new test against the Japanese Yen.  If the August 15th peak of 98.66 Yen is broken, there might be retest on the August high of 99.955 Yen.  Oil and precious metal prices are keeping steady at the high levels seen on Friday.  Brent trades at USD 110.55 a barrel and gold stands at USD 1376.

Stock markets in Europe continue to be under pressure with France, Germany, and England indexes trading down. There was a weak start in the equity market in Asia with Asian Pacific index in red territory the first day of the week. The unrest in Egypt continues with new clashes between Mursi-supporters and the police, claiming an unconfirmed 1000 lives taken until now. US politicians claim there has been a halt in the US billion Dollar military help to Egypt.

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