The US dollar initially fell against sterling on Monday, as the British currency clawed back some of last week losses. Later in the day the US Government released their monthly budget figure for June which showed a surplus of US$72 billion and reduced the annual US budget deficit to its lowest amount since 2008 but the deficit is still very significant at US$431 billion.
This, mixed with the minutes of the US Federal Reserve’s policy, may well prompt the Federal Reserve to stay on the side-lines for longer, and a rate rise will look unlikely. However, those in favour of a strong dollar and keeping an eye on the market for future US dollar strength should ultimately take comfort in a Greek deal for more cash; this would reduce uncertainty and give the Federal Reserve more leverage to raise interest rates.
This could all change tomorrow morning when UK inflation numbers are published; sterling needs positive inflation figures to ramp up market.