Dollar Hits Low After Mueller Grand Jury Report; Sterling Slides

  • Pound takes a licking after BOE votes 6-2 to hold rates steady
  • Yen, Swiss franc rise as risk appetites pared before jobs data

Strategist Seifried Sees Continued U.S. Dollar Pressure

The dollar dropped to a fresh low for the day after a report that U.S. Special Counsel Robert Mueller has impaneled a grand jury as he investigates Russia’s interference in elections and possible collusion with the Trump campaign.

The late afternoon dip in the greenback cemented an earlier decline seen after weak economic data, leaving the Bloomberg dollar index lower by less than 0.1 percent. The greenback reached the weakest since mid-June against the yen after the Mueller news and the 10-year Treasury yield also fell to its lowest since that month. 

The dollar earlier rose the most in six weeks against the pound, which also dropped to its lowest since November against the euro, after the Bank of England voted 6-2 to keep policy on hold and trimmed its growth forecasts. GBP selling on crosses spilled over into other currency pairs, fueling demand for yen and the Swiss franc as recently set relative-value trades were unwound. Markets now turn to July U.S. non-farm payrolls data due Friday.

  • The dollar earlier fell with Treasury yields after the ISM non-manufacturing composite index disappointed. For Friday’s jobs report, the median estimate in a Bloomberg survey calls for gains of 180k; June data showed 222k non-farm jobs were added
  • The euro subsided after setting a fresh high for the session, gaining vs most of its G-10 peers amid the pound selling. Both the yen and the Swiss franc gained vs USD and EUR as cross trades were unwound
  • GBP/USD trading lower by 0.6% around 1.3142 vs session low at 1.3113 seen after stop-loss sell orders were tripped below 1.3150. Ahead of the BOE decision, the pound had climbed to an 11-month high vs the dollar after a U.K. services PMI index topped estimates. The pound is down vs all of ts G-10 peers, paced by a more than 1% loss against the yen
  • USD/JPY fell to a fresh low at 109.86, dropping below the interim low at 109.95 and relinquishing an earlier rebound. Drop was cushioned by residual bids to 109.90
    • Resistance will be defined by Wednesday’s peak at 110.98 ahead of Ichimoku conversion line at 111.07
  • EUR/USD is trading around 1.1874, returning to near session high at 1.1893 seen as demand for EUR/GBP lifted the pair earlier; EUR/GBP was trading near the daily high of 0.9049. Earlier, EUR/USD fell to a low at 1.1831 before bids under 1.1830 cushioned the drop, according to traders in Europe familiar with the transactions who asked not to be identified because they are not authorized to speak publicly
  • U.S. ISM non-manufacturing index declined to 53.9 vs estimates for a more modest drop to 56.9, adding to the lackluster tone of economic data at a time when Fed officials have become more cautious about raising rates
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