At the end of last week, the dollar was in very good shape across the board. The US currency was supported by a low jobless claims report on Thursday. There were very few important eco data last week, but after a good payrolls report the previous week, markets are again looking for indications that the Fed might start scaling back policy stimulation in the second half of this year. US bond yields jumped sharply higher. USD/JPY finally cleared the 100 mark. EUR/USD dropped below a first important support level at 1.3033 and extensively tested the 1.2955 level (April 24 low). At the G7 meeting in London, the finance ministers of the group reconfirmed the ‘Nihil obstat’ for Japan to continue its aggressive policy to fight deflation. In combination with overall strength of the US currency, this fuelled the USD/JPY rally.
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KBC