Forex Market Update: U.S. Dollar Gives Back, Reserve CurrencyTo Be Discussed At BRIC

The dollar came back under pressure during the European morning after Russia indicated that global currency reserves would be discussed at the BRIC meeting. It criticized the existing reserve currencies, including the dollar and pushed for the creation of supranational currency. EUR/USD made an early run up to 1.3875 and received fresh impetus after the German ZEW jumped in June, suggesting that the ECB will not cut rates further. A high of 1.3923 was noted before profit taking forced a move back in to 1.3870. Cable was boosted by the general dollar tone and also received a fillip from May CPI, which came in at 2.2% y/y and raised the prospect of U.K. rate hike sooner than expected. Strong demand for today’s 25-yr syndicated Gilt issuance was also an influence and the pair hit 1.6480 before pulling back in to 1.6400. The JPY crosses experienced heavy bargain hunting from European speculative names, which lifted USD/JPY to 96.80 despite the dollar experiencing moderate selling pressure