Forex: Tuesday’s review

Yesterday the yen weakened most of its major counterparts as investors sought higher-yielding assets amid speculation central banks will step up efforts to spur growth, reducing demand for havens.

The euro rose after the head of the IMF's Christine Lagarde called on the U.S. to an additional stimulus to prevent economic slowdown, as evidenced by the drop in ISM index in the manufacturing sector to around 49.7 in June. It should be noted that Lagarde addressed to politicians, not the Fed. In addition, she stated that the dollar is overvalued, which causes the upward movement of the EUR / USD charts. Players expect the ECB meeting to be held on July 5. The European Central Bank will cut its key interest rate to a record low. The ECB and BOE will announce policy decisions on July 5. ECB officials will lower their main interest rate by a quarter- percentage point to 0.75 percent on July 5, economists survey forecast.

The Canadian dollar advanced against most of its major counterparts as crude oil, the nation’s largest export, rose to the strongest level against the U.S. currency since May 17. It climbed as much as 0.5 percent to C$1.0121. Crude for August delivery rose to as high as $88.04 a barrel in New York, the highest since May 31.

Australia’s dollar touched a two-month high today versus the greenback as data showed the nation’s home building approvals surged in May, adding to signs that the economy is gaining momentum. It pared gains after the Reserve Bank of Australia kept interest rates unchanged and said a subdued international outlook meant the stance of monetary policy remains appropriate.

The pound weakened against a majority of its most-traded peers after an index showed U.K. construction contracted in June. The Bank of England’s Monetary Policy Committee will raise its target for bond purchases by 50 billion pounds ($79 billion) to 375 billion pounds on July 5.