Forex: EUR/USD – Dollar shedding gains early in New York trading

on Jul 9, 2013
Listen Tuesday July 9th: The pair has been falling since the beginning of the European session today, erasing more than 40 pips so far to be currently at 1.2850.

The single currency appears to have taken heart from the EU finance ministers meeting in Brussels today, a day after agreement on a further €3 billion ($3.9 billion) of bailout funds for Greece.

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The demand for the US dollar has softened ahead of Federal Reserve Chairman Ben S. Bernanke speaking tomorrow. Bernanke famously said on June 19 that the Fed could begin winding back its USD85 billion/month bond-buying programme from this autumn if the US economy picks up as per expectations. Last Friday’s strong labour market updates are widely being touted as evidence that that recovery is on track.

A possible fly in the ointment though is the NFIB Business Optimism Index for June, released today and logging a fall to 93.5 points against the prior 94.4 and also well below the expected 96.2.
According to the accompanying report, small-business optimism was at best tepid in June. Six of the 10 index components fell, two rose and two were unchanged. While job creation plans increased slightly in June, expectations for improved business conditions remained firmly in negative territory.

NFIB chief economist Bill Dunkelberg observed: “Nothing cheers up a small-business owner more than a customer, and they remain scarce and cautious while consumer spending remains weak and more owners are reporting negative sales trends than positive ones.” He added that, “Until growth returns to the small-business half of the economy, it will be hard to generate meaningful economic growth and job creation”.
The NFIB report indicates that small-business owners were again unable to contribute to job growth in June, with the average change in employment coming in at a negative 0.09 workers per firm, essentially zero. While 360,000 new part-time jobs were added, something like 240,000 full-time jobs disappeared.


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