Dollar Strength Continues Against EUR and Other Top Forex News.
The dollar rose close to 3 month highs against the euro on Wednesday as optimism over the economic recovery in the U.S. and the prospect of monetary easing by the European Central Bank bolstered the greenback.
The dollar continued to find strength after this mornings data showed that U.S. durable goods orders rose unexpectedly in April and a separate report showed that U.S. consumer confidence improved in line with forecasts.
While the euro continues to weaken following yesterdays comments from ECB President Mario Draghi, that the bank is aware of the risks of persistently low inflation and is prepared to take steps to get euro zone inflation back to its target, the latest indication that the bank could ease monetary policy as soon as next week.
The annual rate of euro zone inflation was 0.7% in April, well below the ECB’s target of close to but just below 2%.
And there was more bad news for the euro when official data showed that the number of people unemployed in Germany rose by the largest amount in five years in May. The seasonally adjusted jobless total rose by 24,000 this month to 2.905 million, compared to expectations for a fall of 15,000.
However, the German unemployment rate remained unchanged at 6.7%, well below the euro zone average of 11.8%.
During today’s session EUR/USD hit a low of 1.3591, the weakest since February 13 before recovering a little, closing down 0.31% at 1.3594.
Meanwhile, the Japanese yen retained gains against the dollar after Bank of Japan Governor Haruhiko Kuroda said further easing was possible even with interest rates at near zero.
At the close of play Wednesday, USD/JPY was trading down -0.16% at 101.83.
Elsewhere, the pound fell to six-week lows after recent lackluster U.K. private sector data on retail sales and mortgage lending tempered expectations for a rate hike by the Bank of England later this year.
GBP/USD closed the session down -0.60% at 1.6709.
And the Australian dollar fell ahead of critical first-quarter business investment data tomorrow, which is expected to show a steep fall in mining investment over the next year.
AUD/USD closed the session down -0.39% at 0.9223.
While the New Zealand dollar fell against the greenback following a drop in business confidence for the third month in a row, while Fonterra Cooperative Group confirmed expectations by cutting its milk payout forecasts for this season and the next.
NZD/USD closed the session down -0.93% at 0.8484.
Finally, the Canadian dollar fell as traders anxiously await gross domestic product data for March and the first quarter due on Friday.
USD/CAD closed the session almost up 0.21% at 1.0883.
More coverage of today’s session.
- WSJ:Bank of Japan’s Kuroda signals impatience with Abe government. – Japan’s central-bank chief predicted victory in his battle to root out the deflation that has long sapped economic vitality in the world’s third-largest economy, but expressed impatience with the government’s pace in cutting red tape and encouraging businesses to invest more.
- FT: EM currencies slip amid easing moves. – The rally in emerging markets currencies has stalled in the last week as central banks lower the defences put in place to protect against market turmoil.
More Top Stories:
Dean Popplewell: Draghi Grabs The EUR’s Attention. – Forex “volatility and volume” appear to have all been thrown out with the bathwater as the various asset classes have shifted sentiment towards the ECB’s outcome next week. Even geopolitical and event risk are trying to be dealt with within the confines of the already established tight trading ranges, at least until investors get a better understanding of what Draghi and company are all about on June 5th.
Marc Chandler: Dollar mostly bid, Sterling and Kiwi offered. – The U.S. dollar remains firm against most of the major and active emerging market currencies. The euro and yen have thus far remained confined to yesterday’s ranges while sterling saw yesterday’s losses extended, following yesterday’s reversal.
Marc Chandler: ECB Framework: BEEEP. – Next week’s ECB meeting could very well prove to be among the most important events of the year. It has taken ECB President Draghi’s leadership and increased risk of lowflation if not deflation to forge an apparent consensus at the central bank that more action is needed.
Globe and Mail: Canadian dollar flat, traders look ahead to Canada, U.S. economic reports. – The Canadian dollar was little changed Wednesday with markets relatively quiet amid an empty economic calendar. Traders are particularly interested in seeing how the Canadian economy performed in the first three months of the year. Statistics Canada releases gross domestic product data for March and the first quarter on Friday. Economists are looking for an annualized rise of 1.7 per cent for the quarter and 0.1 per cent for the month.
The Australian: Australian dollar flat ahead of key investment data. – The Australian dollar marked time today ahead of critical first-quarter business investment data tomorrow, which is expected to show a steep fall in mining investment over the next year.
New Zealand Herald: NZ dollar weakens as business sentiment continues to slide. – The New Zealand dollar weakened after a survey showed business confidence fell for a third month, while Fonterra Cooperative Group confirmed expectations by cutting its milk payout forecasts for this season and the next.
Bloomberg: Gold sinking as exchange-traded assets drop to 2009 low. – Futures in New York reached a 15-week low today after investors sent U.S. equities to a record high. Assets in global exchange-traded funds backed by bullion are near the smallest since 2009, and money managers have cut their bets on a rally by a third since this year’s peak in March.