USD monthly highs against the EUR, stocks gain as geopolitical fears ease

Claire Hogarth23/Jul/2014Currency Updates

After a quiet start to the week, yesterday brought some noise – Japanese markets reopened after the holiday and saw strong volumes, throughout the day world stocks rose sharply and the dollar saw upswing across the board, hitting a monthly high against the euro. It appears that for the meantime geopolitical concerns have taken a backseat.

GBP

London closed with sterling seeing gains against a broadly weaker euro and dipping against the dollar. Public sector borrowing came in on the upside; the government failed to reduce borrowing since the start of the fiscal year, the figure came in at £11.4B, above the £10.65B called. Osborne will not be best pleased however, with wider macro data pointing to 3% growth for this year it should bring down borrowing in the long run.

Mortgage approvals set for release this morning, a slight dip expected.

EUR

European stocks benefited from the rollover in stock markets with the Eurofirst 300 index rallying 1.3%. The contrast with the euro performance could not have been wider. London closed with the euro down across the board. With no data moving the market the euro price was pivoting purely on market sentiment. EUR/USD sank to its lowest level in a month. A key break below the 1.35 mark initiated the downward spiral. The Asian session has seen EUR/USD fail to make any upswing and there remains plenty of shorting on the dips.

Euro bears have gained claws from recent run of weak Eurozone data releases and mixed noises from Draghi, heightened tensions in Ukraine and the possibility of further sanctions against Moscow have also contributed to euro weakness.

France business confidence figures set for release today and expected flat.

USD

Solid day for the US. The S&P 500 hit record intraday highs, the VIX index of volatility was down 6.7% and the dollar index was up across the board with the greenback scalping fresh monthly highs against the euro. Continued ultra-loose policy coupled with encouraging corporate earnings are underpinned by the recent run of decent US economic data, this is all creating good vibes for the dollar and US stocks. The dollar and stocks still have legs and the market expects the run to continue. Naturally the dollar is also taking leverage from heightened geopolitical concerns.

No data out of the US today.

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Written by Claire Hogarth

Marketing Executive at Ebury. English Literature graduate from the University of York and a motivated professional.