The US dollar climbed to an 8-month high on Wednesday after a set of key economic indicators came in broadly positive, reiterating expectations that the Federal Reserve will raise interest rates in December. The dollar index, which measures the value of the dollar against a basket of other currencies, peaked at 100.17 – the highest level since March.
US durable goods orders data out yesterday rose more than expected by 3.0% month-on-month in October. Initial weekly jobless claims were also positive and only increased by 260k versus estimates of 270k. Personal income rose by 0.4% in October as expected but personal consumption expenditure disappointed and was up 0.1% versus estimates of 0.3%. However, the softer than expected reading was not significant enough to worry the Fed against the backdrop of other positive data.
The greenback reached a high of 122.93 yen on Wednesday but drifted lower for the rest of the day and into today’s Asian session. It started to head higher again in late Asian trading, climbing to 122.68 yen.
The euro continued to come under pressure on expectations that the European Central Bank will loosen monetary policy when it meets next Thursday. The single currency was last trading at 1.0604 against the dollar, having recovered from a fresh 7-month low of 1.0565 on Wednesday. Against the pound, the euro was weaker at 0.7019.
The pound strengthened against other currencies yesterday after the UK Chancellor announced smaller cuts to public spending than many had been expecting, boosting the nation’s growth prospects over the next few years. Sterling peaked at 1.5135 dollars yesterday before slipping back to 1.5103 dollars in today’s Asian session.
The Australian dollar was hit by weaker-than-expected capital expenditure data out earlier today. Private capital expenditure in Australia declined by 9.2% during the third quarter, which was much lower than estimates of a 2.8% drop. The aussie fell to 0.7216 against the US dollar after the data, having traded around 0.7255 before the release.
Crude oil prices gave up some of yesterday’s gains as tensions in the Middle East eased slightly following the downing of a Russian jet by Turkey on Tuesday. US oil futures reversed three days of gains to drop to around $42.85 in late Asian trading. Metal commodities were more bullish though with copper jumping 2.4% to $2.0890 per pound.
The rest of the day is looking to be extremely quiet with US markets closed for Thanksgiving and no major data on the European calendar. Investors will now be looking ahead to tomorrow’s latest inflation data from Japan and UK GDP revisions for the third quarter.
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