Dollar consolidates, Euro slips as European politics comes into play

The U.S. dollar’s share of currency reserves reported to the International Monetary Fund fell in the first quarter of 2018 to a fresh four-year low. The share of dollar reserves shrank for five consecutive quarters as the greenback weakened during the first three months of 2018.

Furthermore, Data showed so-called core personal consumption expenditures (PCE) price index, the Fed’s preferred gauge of U.S. inflation, rose by 2 percent from a year earlier, its biggest gain since April 2012. That kept the expectations that the Fed will raise rates at least once and possibly twice by the end of the year.

The U.S. Dollar index, which measures the Greenback’s strength against a basket of six major currencies traded at 94.55 at 09:30 GMT.

Moreover, The Euro slipped after German Chancellor Angela Merkel was dealt a fresh blow when her interior minister offered to quit in an escalating debate over migration policy, which caused the Euro to drop by 0.35 percent to the Greenback to trade at 1.1646 EURUSD at 09:30 GMT.

The EU issued British Prime Minister Theresa May a final Brexit warning on Friday, put your cards on the table, offer ways to overcome “huge” differences and prevent Britain from getting out without a deal.

Over in the United Kingdom, The pound rallied to a two-day high after a better-than-expected revision to Britain’s first-quarter economic growth raised hopes of monetary policy tightening in the coming months to trade at 1.3175 at 9:30 GMT.

Furthermore, the Japanese currency was unmoved by the Bank of Japan’s tanking business sentiment survey, which showed a slight dip in big Japanese manufacturers’ sentiment to trade at 110.06 USDJPY at 09:30 GMT.

While economists assess the direct economic damage from those tariffs to be relatively contained, at least for now, many say a reversal of years of efforts for globalization could have negative repercussions for many years to come, lowering companies’ long-term growth expectations.

Additionally, Canada struck back at the Trump administration over U.S. steel and aluminum tariffs, imposing disciplinary measures on 12.63 billion USD worth of American goods, effective since Sunday.

The Canadian currency traded in a volatile session, after a dovish speech and a hawkish news conference from Bank of Canada Governor Stephen Poloz which dropped the Canadian dollar to a one-year low at 1.3386  before it recovered ground to trade at 1.3179 USDCAD at 9:30 GMT.

In the Energy space, The U.S. crude oil futures settled nearly 1 percent higher at 73.73 USD per barrel at 9:30 GMT.

Over in Australia and New Zealand, The Aussie Dollar rose by 0.53 percent against the Greenback to trade at 0.7373 AUDUSD at 8:00 GMT, Meanwhile the Kiwi Dollar gained 0.1 percent to trade at 0.6756 NZDUSD at 9:30 GMT.