The European Single Currency, euro on Wednesday, June 20, collapsed by a quarter of a percent, with traders wary of pushing it higher before some large option expiries this week.
In addition, European Central Bank policymaker Ewald Nowotny said on Wednesday the euro weakness was caused by the growing interest rate differential between the United State and Europe.
Roughly $2 billion of currency options on the euro/dollar are set to expire this week between $1.1550 and $1.1500, dampening any large moves in the cash markets.
Emerging currencies won some reprieve, with the Mexican peso stronger on the day along with the Taiwan dollar and the South African rand
The Australian dollar, considered sensitive to shifts in sentiment towards China, fell to a 13-month low of $0.7347 on Tuesday before pulling back slightly to $0.7391.
The Swiss franc slipped 0.1 percent to 0.9953 franc per dollar, handing back the previous day’s gains.
Before Thursday’s Bank of England policy decision, the pound struggled near a seven-month low of $1.3151.
No economists polled by Reuters expect the BoE to raise rates on Thursday, and some are getting cold feet about their forecasts for a rate rise in August, which would be only the central bank’s second increase since the 2008 financial crisis .
Before market opening on Wednesday, the People’s Bank of China lowered the midpoint rate by 0.54 percent to 6.4586 per dollar. Traders said the daily fixing was far stronger than their models suggested, an attempt to stabilise sentiment and prevent the yuan from sinking further.
Markets also turned their focus to Sintra in Portugal, where U.S. Federal Reserve Chair Jerome Powell, European Central Bank President Mario Draghi, Bank of Japan Governor Haruhiko Kuroda and Reserve Bank of Australia Governor Philip Lowe are all scheduled to speak at a conference on Wednesday. (Reporting by Saikat Chatterjee; editing by Larry King)
