Euro weakens after automatic sell off orders kick in

The euro weakened 0.86 cents (0.61%) against the US dollar yesterday to close the day at $1.3978.

• In early trading yesterday the dollar dipped against the single currency, as the market questioned how likely a US interest rate cut is later this year. Following better-than-expected American jobs data on Friday speculation grew earlier this week that a cut may be on the cards, but investors began to question its likelihood yesterday.
  
• However, worse-than-expected US Trade Balance figures trimmed the euro’s gains in the early afternoon, after they revealed a fall to -$29.2 billion this month.
  
• News that Russia’s central bank, the fifth largest holder of US government debt, wants to cut the amount of currency reserves it holds in US Treasuries and buy IMF-issued bonds instead initially boosted the euro. However, as it rose it triggered automatic sell orders, which pushed the single currency down 0.3% in late trading.
  
• In trading so far today the euro has headed back over $1.40, as investors continue to pour over recent economic data.
  
• There are no major announcements due in the eurozone today, whilst in the US Retail Sales data is out at 13.30 BST.