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On Tuesday forex investors were cautious about betting on the dollar because of the apprehension caused by the testimony Janet Yellen (Federal Reserve Chair) would give in the congressional meeting on Tuesday.

The release of the January congressional meeting minutes last week drew a lot of attention to Janet Yellen Testimony before the Banking Committee of the United States Senate on Tuesday. This has affected the dollar rate, limiting further increase until this mist clears.

BK Asset Management’s managing director, Kathy Lien said that “the more convoluted and muddled her message is on when rates will rise, the more negative it will be for the U.S. dollar. But even in this case, we do not expect the dollar to crash because rates are still poised to move higher,”

The United States dollar went down from 119.35 to 118.92 against the Japanese Yen. The euro was exchanged at $1.1335 having experienced a 0.4 percent overnight reduction, this slight reduction should be as a result of the new tension arising from the verdict of Greece creditors concerning their list of reforms. The Euro also traded 0.6 percent down against the Japanese Yen at a rate of 134.79yen

United States dollar index was 94.562 rising at 0.3 percent and it has maintained an almost eleven years high of 95.481 as at January.

Image:By United States Federal Reserve (Obtained via email from Federal Reserve OPA.) [Public domain], via Wikimedia Commons

Markit report has shown that there has been an increase in the business activity of service firms in the Eurozone within the month of February. This means that Eurozone services has constantly been on an increase for seven months now – indicating a serious boom for the service companies through out the Eurozone.

 
The report indicated that the composite services purchasing managers’ index (PMI) for February is 53.5, increasing from the value in January which was 52.6.

 
One can deduce from the data that there is a boost in business activity in the Eurozone, because it has maintained a PMI above 50 for several months instead of going below 50 which would mean a decline.  As a result of this boom, firms have been hiring more than before for quit a while now – meaning employment increase.

 
The reverse is the case for manufacturing activity in the Eurozone, the purchasing managers’ index for manufacturing this February fell below 50 for the euro zone. Its value decreased from 49.2 in January to 47.7 in February.

 
Eurozone depend more on services than manufacturing, making servicing companies the core of their economy. More so, the fall in oil price has boosted the services sector since they rely greatly on products like gas in other to run their business activities – a fall in the price of oil means reduced cost of gas. So input has been reduced while output has increased for the service providers in the Eurozone.

 
Contrary to the fear harboured by many, the Greece indebtedness saga did not really hinder the economic growth of other European countries in the Eurozone.  In spite of the crisis, there is a boom in business activity this February. Markit’s Chief Economist, Chris Williamson statement supports this – “Undeterred by the on-going Greek debt crisis, economic growth is gathering momentum and looks set to gain further traction in coming months,” So, the business service sector in the Eurozone is experiencing an all time high.

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The early Friday Asian trade market left the Japanese Yen weaker to other major currencies, however there were no data released yet because of the closed market due to the holidays for the Lunar New Year.

Haruhiko Kuroda, the Governor of the bank of Japan made statements to lessen the effects of the decline. He said that the Bank of Japan is monitoring the bond market of the government of Japan, clarifying that in other to achieve the 2 percent target rate of sustained inflation, negative declined rate of the Japanese Yen will help achieve this.

The US dollar traded against the Japanese yen at 119.03, up 0.007%, it also traded up against the Canadian dollar early in Friday hitting 1.2521 up 0.21%, this is as a result of the bad Canadian retail sales data that reduced the demand for the Canadian dollar.

The United States preliminary manufacturing data which was released later in the day on Friday was upbeat. This data revealed that US manufacturing PMI increased this February to 54.3 higher than the 53.9 in January.

Financial experts report that Euro edges higher against the dollar on Tuesday, as data shows that the German confidence improved and reached a one year high this February. In the meantime, the deadlock between the euro zone and Greece continues.

The ZEW Centre for Economic Research announced an index of 53.0 of German economic sentiment, a rise by 4.6 points from January’s index of 48.4. This is the highest reading since February 2014, but it still hasn’t reached the expectation of 55.0.

The financial market experts expressed a rising sentiment as result of the unexpectedly strong rate of economic growth in the fourth quarter of 2014.

Following the data, the EUR/USD touched session highs of 1.1400, going up from the earlier 1.1385.

The single currency experienced muted gains following the breakdown in talks between the euro zone prime ministers and Greece discussing a new financial agreement for the country.

Greece already has a 240 billion Euro bailout that expires at the end of this month and the new Greek government already expressed the desire of not having it expanded. A six month extension for the bailout was proposed to the government on Monday, but it was drastically rejected after being called ‘’unacceptable’’.

A new extension can still be requested by Athens by Friday. Otherwise, the present bailout will expire on February 28 and the country will literally run out of money, which will trigger its exit from the euro zone.

The euro also rose to session highs against the Yen, with EUR/JPY up to 135.38 and it was also higher against sterling, the EUR/GBP reaching 0.7403.

Tuesday data also shows that the rate of inflation slowed in UK to a record low in January, as consequence of the falling oil prices.

The annual rate of consumer inflation was at 0.5% in December and only 0.3% in January. This was the slowest rate of inflation since records began in 1989.

ONS said that consumer prices fell 0.9% in January, compared to the expectations of dropping to only 0.8%.

However, there is bad news as well, as the core inflation rose 1.4% up from 1.3%  in December.

After going down for two days, Yen is now raising. Economic data from Ukraine and Greece is missing, causing investors to fret.

According to Reuters, Yen started advancing against euro and dollar on Monday as investors decided to stay safe with Yen as the future of Greece and the Ukrainian conflict caused worries.

Yen had suffered from losses on the previous two days against dollar, however, this year it has gained 0.7% in total. It went down Friday mainly because of a positive jobs report from the US rose optimism about Federal Reserve’s rate rise to take place this year.

Alexis Tsipras, the Prime Minister of Greece spoke to the parliament about plans to find relief for this cruel program that international lenders have imposed on Greece. He said that there won’t be extensions, which will cause problems with his partners in the EU.

Western Union market analyst Joe Manimbo said that if Greece were to leave the euro, markets would see a period of serious turmoil.

Angela Merkel, Chancellor of Germany discussed the Ukrainian conflict in a meeting with Barack Obama. The fact that seven civilians and nine troops have been killed there in the past day has also left its mark on the markets.

The Yen had gone down 1.4% Friday, but as investors found it a safe investment, on Monday, dollar went down 0.6% against 118.37 yen. Euro went down 0.3% to 134.13 yen. However, the euro went up 0.2 against dollar, closing at $1.1326. Even though, expectations towards euro stay negative.

Finance ministers of the Eurozone will meet Wednesday to hear a proposal from the Greek minister. The European Council will meet the next day.