Previous session overview

The U.S. dollar fell on Tuesday, most notably versus its Canadian and Australian counterparts, as central banks in those countries solidified expectations of interest-rate increases in those countries, making their currencies more attractive than the greenback.

The Bank of Canada kept its overnight rate steady while saying inflation has been firmer than anticipated, leading some to think policy makers will raise rates before June.

The U.S. currency fell 0.8% versus the Canadian dollar to CAD1.0337.

Meanwhile, the euro was slightly weaker ahead of further budget cuts due Wednesday from Greece, with the single currency down 0.2% to USD1.3537.

The dollar slid 0.1% against the Japanese yen, to buy JPY89.12.

The dollar index, which measures the greenback against a trade-weighted basket of six major currencies, was lower earlier and recently traded at 80.845, compared to 80.753 in late North American trading Monday.

Meanwhile, investors eased off the U.K. pound a bit, with pressure much less intense than Monday's session after recent polls showed the chances of a hung Parliament had eased somewhat. A hung Parliament could lead to political gridlock and put additional pressures on an already-stressed economy.

The Pound bought USD1.4941, compared to USD1.4992 late on Monday.

Market expectation

The euro-yen is continuing its descent now trading at JPY120.37, as many intraday longs start to bail. There were talks of exporters looking to sell into any rallies earlier as traders speculate that they are seriously under hedged coming into the financial year end. There is also talk in the market of some decent size stops building sub JPY119.50 level.

EURUSD nasty chop as the pair rotated to USD1.3580 ahead of the London fixing as MNI reported that the ECB would announce liquidity withdrawal steps, only to lurch lower after a German coalition member said there would be no aid for Greece, political posturing still alive and well ahead of the Greek Cabinet meeting set for Wednesday where an austerity budget is expected to be announced. Euro is back at USD1.3535 now.

The Swiss franc dropped suddenly against other major currencies late Tuesday morning, prompting fresh suspicions that the Swiss central bank may be pushing it lower. Analysts say the SNB has a tough task in seeking to prevent franc strength as a Swiss economic recovery, continuing Swiss bank deleveraging and persistent pressure on the euro all push the currency higher.

Disclaimer: the data made available by Dukascopy (Suisse) SAis for informational purposes only. Publication of this data by Dukascopy (Suisse) SA does not constitute provision of investment advice and Dukascopy (Suisse) SA assumes no responsibility with regard toany information, forecast or recommendation herein contained and assumes no responsibility with regard toany losses resulting from any activities conducted the basis of this data, including any investment decisions.

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