The US dollar rebounded from yesterday’s lows following some weak economic data. A late rally in oil prices helped the greenback and US stocks to move higher.
US crude futures jumped 5% after the latest US inventory data showed gasoline and distillate stocks declined more than expected even though crude oil inventories increased. However, on Thursday, prices moved back down again on lingering oversupply concerns. WTI futures were last trading 1.2% lower at $31.77 a barrel.
The dollar fell below 112 yen yesterday after the Markit services PMI showed a surprise contraction in US services activity in February. New home sales figures also disappointed. The greenback touched a low of 111.03 yen on Wednesday before recovering to around 112.20 yen today.
Dovish comments from Fed officials had little impact on the dollar. Dallas Fed President Robert Kaplan said on Wednesday that he is likely to lower his outlook for the expected path of US interest rates as a result of tightening financial conditions. St. Louis Fed President James Bullard was also cautious saying that falling inflation expectations are a concern.
The euro also rebounded from yesterday’s lows when it hit a 3-week low of 1.0956 dollars. The single currency was last trading at 1.1021 versus the dollar and 0.7916 against the pound.
Sterling remained under pressure at 7-year lows against the dollar as Brexit worries dominates traders’ minds. The pound was steady around 1.3935 dollars on Thursday, having dipped below the 1.39 level yesterday.
The Australian dollar dropped below 0.72 dollars today despite better-than-expected fourth quarter business spending data in Australia. Traders were more focused on the planned investment spending for 2016/17, which came in below expectations. The aussie fell to 0.7155 against the greenback in early Asian trading before rebounding to 0.7181 in late session.
A slump in Chinese equities also weighed on the aussie today. China’s main indices closed down over 6% as a combination of uncertainty over the economy and profit taking from recent gains dragged share prices lower.
Looking ahead to the rest of the day, the second estimate of UK fourth quarter GDP will be watched in European session along with the final Eurozone CPI figures for January. In the US session, durable goods orders and weekly jobless claims will be the main data coming out of the US.
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