In foreign exchanges the dollar held up after bouncing Monday from last week’s sharp losses thanks to upbeat factory figures. Analysts also suggested central banks were stepping back from last week’s hawkish comments indicating a tightening of monetary policy.
The pound was weighed by below-forecast manufacturing data while European Central Bank officials looked to temper boss Mario Draghi’s suggestion of higher interest rates.
“We’ve seen an aggressive pullback from last week’s speculative bets fuelled by the hawkish chorus of central bankers,” said Stephen Innes, senior trader at OANDA.
“The dollar recovered in part due to the (US) manufacturing report, which surprised with the highest print since August 2014. But concerns that central banks may temper the hawkish lean for fear of creating unwanted volatility remain in the back of traders minds.”
However, the greenback eased slightly against the Japanese yen following another missile test by North Korea, the latest provocation to ratchet up tensions over its nuclear weapons ambitions.
Investors are awaiting the release Wednesday of minutes from the Federal Reserve’s June policy meeting at which it raised interest rates, while key US jobs data is due on Friday.
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