Dollar Denominated Pairs Stabilized in Forex Markets

Forex markets saw the stabilization of dollar denominated pairs. While the US dollar held most of the gains it had made in the past few days, other currencies like the AUD, GBP and Euro traded close to the lows they had hit recently.

Trading volumes were small as the holiday in UK did not allow several investors to trade. However, the general tendency in the markets spelt cautious. This is likely to continue, as the economic data revealed that the German services PMI fell to 51.8 for May. German Factory Orders decreased close to 2% in the same month. Retail sales figures from the eurozone showed a drop of 1%.

Macro-data is the focus of attention

In the recent weeks, the market has paid attention only to macro data – for close to half the trading sessions. Despite this and the fact that the G7 meeting took place, few news agencies covered stories on the trading sessions.

The key objective of the G7 was to talk about the debt crisis that the Eurozone is going through. Before the meetings were held, there were speculations that Germany will pressurize Spain to change its opinion to agree to a new set of austerity requirements on a bailout loan. However, this did not happen during the meet. Besides this, the next biggest risk for the euro zone is the Greek elections, which have been scheduled to take place on 17th June.

Forex markets get push from meetings in Australia and Canada

The biggest push the forex markets received was from the meetings the central banks in Australia and Canada held. The RBA decided to change its financial policy to make it more accommodative. It plans to do this by decreasing the base interest. The reduction will be by 25 basis points. However, the Canadian central bank, which holds its interest rates at 1%, did not agree to match it. In contrast, the policy statement from the country showed that it will continue to stay dovish. It indicated that in case the economic figures drop steeply, it will allow for rate reductions. As a result, the Canadian dollar has a positive position.