FX Market Summary 04-17-2014: Solid Data Protects Dollar

Despite some optimism surrounding the outlook, Fed Chair Yellen remained uneasy over labour-market developments with comments on Wednesday that the pace of recovery remained exceptionally slow despite being generally.  Although the remarks suggested that the tapering programme would continue for now, the underlying tone was broadly dovish and did not provide significant dollar support. EUR/USD was able to hold above 1.3800 and initially moved higher to 1.3840 in Asia on Thursday. 

GBP/USD was pulled higher by general dollar vulnerability and the pair was able to break above key resistance in the 1.6820 area with a peak just below 1.6850 early in Europe on Thursday. There was still solid underlying selling interest at higher levels and Sterling was unable to secure further support during the European morning.

Liquidity levels started to decline sharply ahead of the Easter break which increased the threat of erratic moves and also intensified underlying caution over making aggressive moves. USD/CAD consolidated around 1.10 with further moves higher blocked by stronger than expected Canadian inflation data. AUD/USD was more vulnerable with selling pressure on the Euro cross as AUD/USD retreated to the 0.9340 area.

The US jobless claims data was again stronger than expected with a figure of 304,000 in the latest week from a revised 302,000 previously which took the moving average figure down to the lowest level since December 2007, bolstering near-term confidence in the labour market.

EUR/USD edged lower following the claims data without being able to many decisive beak lower as buyers continued to show solid interest on dips.

The Philadelphia Fed business confidence index was also much stronger than expected with a figure of 16.6 for April from 9.0 previously. The dollar again moved stronger after the data with a USD/JPY move back to 102.20.

The passing of significant option expiries at the New York cut also tended to curb Euro demand to some extent and EUR/USD dipped back to the 1.3830 area with sellers still struggling to make much headway. GBP/USD found support on dips to the 1.6800 area with good underlying buying support as fundamental optimism was sustained for now. 

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