The U.S. dollar was remaining under pressure during the first half of the week, however, resumed its growth after the Federal Reserve Chairman Mr. Bernanke chastened the supporters of additional easing, saying that his agency continued to expect modest growth of the world’s largest economy. He also noted that the Federal Reserve was ready to take decisive actions to protect the national financial system in case of an escalation of the debt crisis in the Eurozone. In addition, fairly positive reports on the PMI from the Institute for Supply Management diluted the pessimism of investors about the U.S. economy. Towards the end of the week, the USDX Dollar Index returned all the previously lost positions, reaching the opening level.
The EUR/USD pair attempted to resume a downward trend, reaching the resistance in the area of 1.2625 during the correction that began after the release of negative data on the labor market in the United States on Friday, June 1st. On Thursday, June 7th, the Spanish government passed a test for the ability to borrow on international capital markets and was able to place bonds for 2.1 billion Euros at the average yield of 6.03%. This proved to be somewhat more expensive than one month before; however, the demand for the bonds was very high. Nonetheless, the situation in the Eurozone remains tense, which continues to put pressure on the Euro. Towards the week’s closing, the EUR/USD pair was trading in the area of 1.2440.
The British pound continued to correlate with the Euro against the Dollar. The Monetary Policy Committee made no change in the monetary policy, contrary to the expectations that the regulator could expand the quantitative easing program. The Briton attempted to strengthen its positions, but the rise of the Dollar returned Sterling to its original positions. Towards the week’s closing, the GBP/USD pair was trading in the area of 1.5413.
The Australian dollar significantly strengthened its positions at the beginning of the week, as the Dollar was correcting downward, and the GDP data for the first quarter was much higher than expected and gave a reason to believe that the Reserve Bank of Australia might slow down the further reduction of the discount rate. However, the American that managed to return to its growth, compensated for some losses. At the same time, its pressure on the Australian and New Zealander is now of less intensive character.
The Minister of Finance of Japan June Azumi held a verbal intervention, calling the recent strengthening of the Yen too strong, hinting at the possibility of new interventions by the Bank of Japan, which moved up the quotes of the USD/JPY pair. In the late afternoon on June 6th, it was trading at the 79.40 level.