Market News: Dollar Struggles To Gain Traction, Euro Steady

Adrian Jones

Adrian Jones

The Dollar keep a low profile early today having dipped on Monday following the release of data on U.S. manufacturing activity.

Yesterday financial data firm Markit had said that its preliminary U.S. Manufacturing Purchasing Managers Index slipped to 55.5 from 57.1 in February, and so disappointed the market.

Investors had been bullish on the Dollar last week following suggestions from Federal Reserve Chair Janet Yellen of the possibility of raising interest rates early 2014.

For the rally to hold though, it needed backing up by strong U.S. economic data.

Recent data has not been convincing enough though it does still point to signs that the U.S. economy has been picking up momentum, having slowed in the first quarter for mainly weather related reasons.

I expect though that upcoming U.S. data should be stronger as the weather effects, and some data distortions related to the same, begin to fade.

Later today investors will be focused on a slew of economic data due out, including readings on consumer confidence and new home sales.

Atlanta Fed President Dennis Lockhart and Philadelphia Fed President Charles Plosser are also due to speak.

Earlier the Dollar index dropped from Monday’s session high of 80.290 to fetch 79.952.

Against the Yen, the Dollar gained a slight 0.1% to 102.33 Yen.

The Euro remained steady at around $1.3835.

On the Euro front, market players will be looking ahead to the release today of the Munich-based Ifo think tank’s survey on German business morale.

Activity remains subdued as investors also remain wary of tensions in Ukraine.

The Australian Dollar hit its highest level since December 2013, at $0.9158.

Technical signals remain bullish as the Aussie has recently hit peaks of $0.9135, $0.9136 and $0.9138.

Something to keep a look out for is possible intervention again by the Reserve Bank of Australia (RBA) that may again begin “jawboning” the Aussie down.

The RBA has frequently said that the Aussie is historically high and that it considers a lower currency as been potentially more helpful in rebalancing the economy.

The Yuan climbed 0.1% to the Dollar to 6.1827 a day after posting its biggest gain in nearly 30 months.

Its rise has come amidst speculation that the Chinese government will unveil stimulus measures to support the economy.

Recent wild swings in the Yuan have been disconcerting to many investors as they remain concerned over recent news of a domestic bond default and slowing economic growth.

Click on Image to Enlarge

[Image: President Barack Obama in the Oval Office with Secretary of State John Kerry and National Security Advisor Susan E. Rice in the Oval Office]

Chinese President Xi Jinping has been urged by U.S. President Barack Obama to move the Yuan toward a more flexible, market based exchange rate.

All the best!

Adrian Jones

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