The Dollar slipped on Tuesday, a day after its strongest rally against the Euro in more than a year, as rebounding global stock markets rekindled investors' appetite for risky assets.
Market attention is also focused on Wednesday's US Existing Home Sales report amid fears the data would point to a further deterioration in the housing market and increase the chances of more Federal Reserve interest rate cuts this year.
At yesterday close, the Euro was up 0.59% against the Dollar at 1.4257. While the data will not on their own prompt the central bank to ease, the prospect of problems in the broader economy will force the Fed's hand to promote growth, analysts say. US interest rate futures are pricing in a roughly 86% implied chance of a 0.25% cut in the federal funds target rate to 4.50% at the end of their Oct. 30-31 policy meeting. Such a step, coming after September's 0.5% cut, would further reduce the appeal of dollar-denominated assets and undermine the Dollar.
GbpUsd rose 0.84% to 2.0496. UsdChf fell 0.33% 1.1736. UsdJpy rose 0.44% to 114.91 after having hit 113.26 low the day before. Firmer equity markets prompted some investors to move back into carry trades, hitting the Yen and boosting high-yielding currencies such as the Australian, New Zealand and Canadian dollars. EurJpy was up 1.03% to 163.83, its biggest one-day percentage gain in a month. GbpJpy went up 1.28% at 235.53 recovering from previous day 232.55 low. The high-yielding Australian Dollar and New Zealand Dollar gained respectively 1.24% and 1.1%. Both currencies also rose against the Yen. The Canadian Dollar touched a 33-year high against the Dollar after Canadian retail sales data for August beat expectations. UsdCad was last trading down 1.25% at 0.9663.
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