Dollar Steady Ahead of Fed Meeting and Other Top Forex News.
The U.S. dollar held steady against most major currencies on Monday, with the conclusion of this weeks Federal Open Market Committee policy meeting on Wednesday uppermost in traders minds.
The yen started the session strongly against the dollar after the release of soft U.S. housing data, which showed that sales of new, single-family houses in December came in at a seasonally adjusted annual rate of 414,000, missing analysts expectation of 475,000.
The figures were still well above the December 2012 reading of 396,000 however, and the data also revealed that inventories remain lean and prices continue rising, which muted the report’s impacts on the dollar.
But the yen’s gains were pared back in the afternoon after Japan reported a somewhat larger than expected unadjusted trade deficit of JPY1.302 trillion in December. Largely because yen depreciation boosted the value of imports more than Japanese businesses were able to boost exports and export prices.
USD/JPY ended the session up 0.34% at 102.68.
In Europe the euro found support after German research institute Ifo reported that its business climate index rose to 110.6 in January, beating forecasts for a 110.0, sparked demand for the single currency.
During the U.S. session, EUR/USD climbed to a high of 1.3717 this morning, before paring back gains, finally closing down 0.06%, to 1.3669.
Also in Europe, the head of the eurogroup of finance ministers Jeroen Dijsselbloem said earlier that turmoil in emerging market economies won’t affect the euro zone’s recovery.
In the U.K. the pound remains supported after last weeks sharp fall in the U.K. unemployment rate heightened expectations that the Bank of England may raise interest rates sooner than anticipated.
GBP/USD climbed to a high of 1.6587 before finally closing up 0.58% at 1.6577.
Elsewhere, the Australian dollar pulled back from Friday’s three-and-a-half year low against the U.S. dollar with AUD/USD climbing 0.81% to 0.8753, after falling to a low of 0.8659 on Friday, the lowest level since July 2010.
NZD/USD also found support ahead of Thursday’s RBNZ rate review. Traders are split as to whether the Reserve Bank will raise rates at this meeting or the next. NZD/USD ended the session up 0.33% to 0.8242.
And the Canadian dollar held steady after falling to four-and-a-half year lows last week against the U.S. dollar. USD/CAD closed the session up 0.06% at 1.1093.
More coverage of today’s session.
- FT: Love affair with pound to be tested. – UK fourth-quarter GDP data are published on Tuesday. The report may add further fuel to the debate about whether the Bank of England will be the first of the large developed economies to raise rates in the current cycle.
- FT: Japan records worst trade deficit following nuclear shutdown. – Japan has unveiled its worst annual trade deficit on record, underlining the impact of the total shutdown of nuclear power and putting the often heated debate over the currency-weakening effects of “Abenomics” in a new light.
More Top Stories:
Dean Popplewell: USD/CAD – Steady as U.S. housing data dips. – In Monday’s North American session, USD/CAD is trading in the mid-1.10 range. It’s a quiet start to the week, with just two releases. Today’s key event is US New Home Sales which dropped to a three-month low, well below the estimate. US Flash Services PMI met expectations. There are no Canadian releases scheduled until Friday.
Marc Chandler: Fragile Monday. – The major currencies are consolidating, but many of the emerging market currencies, including the South African rand, Turkish lira, Indian rupee, Russian rouble, Polish zloty and Hungarian forint remain under pressure.
WSJ: Canadian dollar continues consolidation amid wary markets. – The Canadian dollar is higher, but is still essentially on pause mode Monday morning as it consolidates after sharp losses against the greenback last week.
WSJ: New Zealand dollar ‘holding its own’ despite jitters; Focus on RBNZ. – New Zealand–The New Zealand dollar was slightly weaker late Monday but remained relatively firm against both the Australian and the U.S. dollar ahead of this week’s central bank rate review.
Sydney Morning Herald: Aussie dollar holds ground, stays vulnerable. – The Australian dollar backed off a 3-1/2 year low on Monday after steep selling late last week lost momentum, but it remained vulnerable to more losses if concerns about emerging markets spark further selling in higher-risk currencies.
MarketWatch: Gold futures pare loss as U.S. equities fall. – Gold futures on Monday pared earlier losses as a decidedly lower turn in U.S. equities provided some support for the precious metal.