The US dollar declined against world currencies on Wednesday, as investors shifted their attention to the minutes of the June Federal Open Market Committee policy meetings, while Greece continued to promise credible reforms ahead of Sunday’s summit of European leaders.
The US dollar index, a trade-weighted average of the dollar against a basket of six currencies, slipped 0.3% to 96.58. The index had declined to a session low of 96.33 after surging to more than one-month highs on Tuesday.
The dollar lost ground against the euro, which continued to hold the psychological 1.10 level. The EUR/USD climbed to a daily high of 1.1059. It would settle at 1.1037 in the early New York session, up 0.4% from the previous day’s close. The EUR/USD faces immediate support at 1.0892. On the upside, initial resistance is likely found at 1.1063.
The British pound continued to slide against the dollar after plunging by nearly 200 pips on earlier in the week. The GBP/USD declined 95 pips or 0.6% to 1.5364. The pair is likely supported at 1.5408. Initial resistance is likely found at 1.5460. According to analysts, the latest drop in the GBP/USD exposes 1.52 as a possible downside.
The US dollar gained more traction against its northern rival, the Canadian dollar, as the USD/CAD appears poised to re-test 1.2800. The pair advanced 0.4% to 1.2759 after the Canadian government said building permits plunged by 14.5% in May.
The US has no major economic releases scheduled for Wednesday, but the Federal Reserve will publish the minutes of the June FOMC policy meetings later on in the day. Investors are looking for clues about when policymakers may begin adjusting interest rates. Based on the Fed’s latest summary of economic projections, at least one rate adjustment is expected this year. However, other analysts suggest the Fed may hold off on raising interest rates in light of Greece’s worsening debt crisis.
Greek Prime Minister Alexis Tsipras promised to submit a credible reform proposal to international creditors on Thursday just days before an emergency summit involving all 28 European Union members. According to reports, the Tsipras government is looking for a three-year loan in exchange for reforms. Meanwhile, the European Central Bank is reportedly discussing its emergency lending program for Greek banks, which are on the verge of collapsing.
Greek banks are expected to remain closed for a second straight week. They were originally expected to reopen on Tuesday, but failed debt negotiations pushed back the timeline until after Sunday at the earliest.
Based out of Toronto, Canada, Husni Sam Borji is senior macroeconomics analysts who contributes regularly to TradersDNA, where he examines the global financial markets. Husni Sam has authored dozens of government reports and industry whitepapers, as well as thousands of financial articles. Husni Sam holds a BA from the University of Windsor and a Master’s degree in Economic Public Policy from McMaster University.
His expertise includes macroeconomics, fundamental analysis, industry research and global political economy.