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Dubai: The markets continued to take cues from movements in oil prices, stocks and economic data to decide the fate of the US dollar last week. Sterling remained under pressure from gloomy economic data in the UK.
Euro
The US dollar commenced the week near one-month lows against a basket of major currencies on concerns that surging oil prices could further slow the US economy and add to inflation pressures. With crude oil touching $135 per barrel recently, markets have priced out another interest rate cut by the US Federal Reserve this year, with the possibility of a rate hike by the end of this year priced in.
The dollar was supported by a report showing US new home sales rose unexpectedly in April. The greenback was further aided against the euro by a slide in oil prices and gains in US stocks. The euro was also pulled down by data showing that French business confidence slumped to a 2-1/2 year low in May while the forward-looking German GfK index pointed to an unexpected deterioration in consumer sentiment in June.
Range last week: $1.5460 to $1.5818 (Dh5.6785 to Dh5.8100)
Range for this week: $1.5450-$1.5750 (Dh5.6748- Dh5.7850)
Yen
Early in the week, comments by Bank of Japan (BoJ) governor Masaaki Shirakawa, in which he said that Japan's short-term interest rates are at appropriate levels considering the country's potential growth rate, did not have much impact on the yen levels in the currency market.
The yen fell against the US dollar to near a two-week low after a better-than-expected reading of US durable goods orders eased concerns about the US economy's outlook and underscored market expectations the US Fed will raise interest rates by 0.25 per centage point to 2.25 per cent by year-end.
Range last week: 103.10 yen to 105.87 yen (Dh0.034693-Dh0.035626)
Range this week: 102.50 yen to 105.50 yen (Dh0.034815-Dh0.035834)
Sterling
Sterling commenced the week under pressure with markets worried about the mix of rising inflation and slowing growth that could tie the hands of BoE in terms of monetary policy. Data showed that house prices in England and Wales fell for the eighth month in May.
Sterling slipped further against the dollar on data showing that the GfK consumer confidence index fell to -29 in May from -24 in April, its lowest level in 18 years.
BoE policymakers meet for their two-day monthly rate setting meeting on Wednesday.
Range last week: $1.9671 to $1.9846 (Dh7.2252- Dh7.2894)
Range this week: $1.9550 to $1.9850 (Dh7.1807- Dh7.2909)
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