Forex Daily Newsletter

Forex - Dollar demand waned on Tuesday after US trade deficit unexpectedly shrank in June

The Dollar slipped against the Euro on Tuesday, breaking a five-session rally as investors locked in profits ahead of key economic data later in the week. EurUsd has already dropped 4.11% this month with help from a sell-off in Oil prices and growing fears economies elsewhere may slow at a faster pace than in the United States.

Yesterday, EurUsd slid to a six-month 1.4816 low after breaking a series of key chart levels, convincing some analysts that the Dollar may be ending its seven-year slide. Also, Dollar demand waned on Tuesday and investors shrugged off data showing the US trade deficit unexpectedly shrank in June. The Dollar also accelerated its losses against the Yen in late afternoon trading after selling on Wall Street picked up speed.

EurUsd edged up 0.13% at 1.4891 after earlier touching a six-month low of 1.4816. UsdJpy was 0.79% lower at 109.29, a day after hitting a seven-month peak of 110.40. EurJpy fell 0.91% at 162.74. GbpUsd fell to a 1-1/2 year low at 1.8954, down 0.84%. UsdChf rose 0.13% to 1.0878 after hitting 1.0926 6-months high.

Oil prices traded down 1.31% on Tuesday at $113 per barrel, after dropping more than $35 since a record 145.45 high hit in July. Fears of rising oil prices had been weighting on the outlook for the US economy.

Losses in the Dollar were limited as investors awaited data on US retail sales and consumer prices for July, due out Wednesday and Thursday. The economy is still ailing, with the financial sector recovering from a year-old credit crisis. Data on Tuesday showed the US trade deficit shrank unexpectedly in June to $56.8b, down from a revised $59.2.

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