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Asian Session – Dollar regains some ground in quiet trading

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FB-eurogroup7The bout of profit-taking on the US dollar looked like ending during the past couple of sessions, as a drop in weekly US jobless claims data caused traders to reestablish dollar longs.  In addition, there was confidence that the Fed was going to raise interest rates by the end of this year, even though the likelihood of an early rate hike had diminished after the relatively dovish Fed minutes.  According to some market experts the US was still “the only game in town” and sooner or later investors would again start to prop up the dollar.

The latest developments in the Greek debt crisis was that Athens submitted an application for a 6-month loan extension the previous day, but Germany had rejected the proposal as it did not constitute a “substantial solution”.  Germany insists that more of the terms of the existing bailout agreement are incorporated into any loan extension towards Greece.  According to other reports however, Greece made some significant concessions in its proposal.  A Eurogroup meeting of Eurozone finance ministers is expected to discuss the issue later in the day and most investors expect some kind of deal to take place.  The euro remained below the 1.14 level at around 1.1350, as it awaits further developments.

The market was relatively quiet in Asia as countries like China, Singapore, Malaysia and Hong-Kong were closed because of the Lunar New Year Holidays.

Looking ahead, flash PMI numbers from the Eurozone will be key to watch.  UK retail sales and Markit manufacturing PMI from the US will also be looked at. The euro is also expected to move around as Eurozone Finance Ministers make statements on arrival to the Eurogroup meeting and as news starts to trickle out with respect to the meeting’s outcome.

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