The euro headed for its biggest two- day gain versus the dollar since March after German business
confidence unexpectedly rose, bolstering speculation the European Central Bank
won't cut interest rates.
The British pound fell against all of the major currencies after minutes from
this month's Bank of England meeting signaled policy makers remain reluctant to
lower interest rates to stimulate growth. Currencies of commodity-exporting
nations including Australia
and Canada
surged as crude oil rose above $132 a barrel.
The minutes of the Federal Reserve's
April 30 meeting showed mkts improved and econ data were as expected,
though housing continued to weaken and infl data were mixed. FOMC is worried
about up-drift of infl expectations. There was little change in staff econ
forecasts, tho FOMC lowered theirs (see below).
Futures on the Chicago Board of
Trade show traders see an 88 percent likelihood the Fed will keep its target
rate for overnight lending between banks at 2 percent on June 25. The balance
of bets is for a reduction to 1.75 percent.
EUR/USD rose
from $1.5630/70 to the highs around $1.5780 amid strong Ifo report.
GBP/USD fell
initially from $1.9679 to $1.9627 lows area, but bids on $1.9630/20 capped
losses. After the MPC minutes rate managed to rebound to $1.9685 and then – to $1.9720.
USD/JPY rose
from Y103.10 to Y103.69. Later rate retreated below Y103.00.
Today’s focus is on UK retail sales
figures and CBI orders data. Also in Europe EU industrial orders report due to
come.
At 12:30 GMT US will release its
Jobless claims data.