The Dollar rose more than 1 percent against a basket of major currencies yesterday. As expectations stay firm that the Fed will raise interest rates later this year, we are likely to continue to see gains in the Dollar. The greenback rose against the Euro to its highest level for a month and also pushed to a high against the Yen not seen since July 2007. The improvement of data out of the U.S. bolstered the Dollar, with durable goods showing a decline of 0.5%, slightly below forecast. Consumer confidence grew for May as did new home sales, where sales in April increased by 6.8% on March beating market forecasts. If the economic data continues to show improvements in the U.S, the strength of the greenback will continue.
With anxiety still surrounding Greece’s financial crisis, today's focus will be on the start of the three day G7 meetings. Finance ministers and central bankers from the G7 countries are to meet to discuss global growth and will no doubt discuss the crisis facing Greece. Volatility could be seen for the Euro if any comments or rumours are heard regarding Athens and their bailout issues.
As the time for meeting the reform requirements from the IMF and EU is running out all eyes are focused on Greece and how they play their cards. The next payment due to the IMF is on the 5th June, but with Athens of the verge of running out of money, pressure remains on the single currency as the uncertainty surrounding a Grexit remains.