Quick fade for dollar rally, German trade disappoints

The outlook for central bank policymaking going into the second half of 2014 dominated attention in major currency markets on Tuesday, with impetus for the dollar from surprisingly strong US jobs data last week already fading. The jump in new hiring, released before the July 4 holiday, provided a brief fillip to those still hoping that a surge in the dollar widely forecast by the big investment banks will eventually materialize. The US currency eased against the euro on Monday and was struggling to make ground in Europe on Tuesday in the face of the latest signs of German opposition to more policy easing by the European Central Bank. It was just 0.07 percent higher against the euro in early European trade and had gained 0.06 percent against a basket of currencies. A dip in German trade volumes argued for more ECB easing, but most analysts say the dollar will not make more progress until there are clearer signs from the US Federal Reserve that it is firmly on track to raise interest rates next year. Fed policymakers Jeffrey Lacker and Narayana Kocherlakota are both due to speak later on Tuesday. Germany's hugely positive balance of trade is one underlying reason for the euro's strength and it recorded a record trade surplus of almost 19 billion euros in May. But signs for the broader strength of the euro zone's biggest economy were less positive - both exports and imports fell sharply. The pressure on euro zone exporters due to the single currency's strength this year was underlined by Airbus chief Fabrice Bregier's call for a 10 percent devaluation of the euro. The dollar eased 0.1 percent to 101.775 yen, inching away from a two-week high of 102.27 yen set last Thursday. The Australian dollar gained a bit of a reprieve, edging up 0.2 percent to $0.9390 and edging away from a two-week low of $0.9327 plumbed last week. Yet it remained well below a recent high of $0.9505, with markets yet to fully get over the central bank's latest attempt to talk the currency lower. Investors are now waiting for more definitive signs that something will happen on the central bank front, said Emma Lawson, senior currency strategist at National Australia Bank in Sydney, according to Reuters.