The Euro is at a three-month low contrary to the dollar on July 7 after the German data intensified the doubts about the economic recovery strength. At the same time, the United States currency awaited the Fed or Federal Reserve’s minutes from its previous policy meeting. The Euro has changed hands at $1.1820 and reached a three-month low at $1.1806 on July 6. Against the yen, the European currency has dropped to 130.81 yen and is currently edging more towards its two-month low of 130.05 yen set on June 21.
The ZEW economic research institute has reported that the biggest economy of the euro zone, the investor sentiment in Germany, declined sharply in July month, even though it stayed at an extremely high level. Several data revealed that orders for German-made foods had the sharpest fall in May month since the lockdown began in 2020. It was hampered by the less demand from the nations outside the euro zone.
Many other risk-sensitive currencies were raised after the oil prices plunged due to OPEC’s cancellation of a meeting. The currencies took a hit after the major players failed to come to an agreement to raise the oil supply.
The Australian dollar has traded 0.15 percent higher at $0.7502. It had stabilized after the bounce on July 6 when the Reserve Bank of Australia or RBA initiated the first step to stimulus tapering. The RBA has announced the quantitative easing program’s third round, though at a smaller size compared to the previous two rounds. It will retain the April 2024 bond for a three-year yield with a target of 0.1 percent.
The yen is underpinned by the cautious risk sentiment, which remained flat at 110.66 yen per dollar while extending its rebound from the 15-month low of 111.64. The gains of the yen came due to the decline of the US bond yielding to the low levels since the month of February. It came after data indicated that the service sector progressed at a slower pace.
Fed Policy Outlook
In the recent few weeks, the yields have decreased. Many speculators say that the rising inflation will prompt the Federal Reserve to tighten its policy. Minutes from the meeting of June policy on July 7 would offer new hints on the complete policy outlook. The head of G10 FX research Valentin Marinov has said that the investors will want to know more about the timing of the QE taper. Marinov added that the investors would emphasize any discussion of an even rate lift-off.