Daily Morning Report 23.05.2017

The yen gained and the pound dipped on Tuesday in Asia after a deadly explosion at a concert venue in Manchester was said to be a terror attack with reports suggesting that the government is mulling rescheduling the June 8 polls for parliament.

USD/JPY changed hands at 111.16, down 0.13%, while GBP/USD fell 0.12% to 1.2983.

AUD/USD traded at 0.7493, up 0.20%.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted down 0.07% to 96.81.

Overnight, the dollar fell against a basket of major currencies on Monday, weighed by surge in the euro, after German Chancellor Angela Merkel said the single currency was “too weak.”

Speaking to students at a secondary school in Berlin, Merkel said that the euro is “too weak”, as a result of European Central Bank accommodative monetary policy.

EUR/USD soared to a six-month high as investors believed that Merkel’s comments would pressure ECB policymakers to consider tapering the central bank’s expansive monetary stimulus package, which includes ultra-low interest rates.

The dollar made a poor start to the week, coming off the back of its worst week in more than a year, after a tumultuous week in U.S. politics led investors to doubt whether President Trump would be able to deliver on his pro-growth initiatives to boost the economy.

The Trump administration has promised to introduce a pro-growth agenda, widely viewed as inflationary, which includes tax-reform, deregulation and a $1 trillion infrastructure spending package.