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    European Session – Sterling steady after UK GDP, dollar buoyed by US data

    The European session today was relatively subdued with little volatility. Risk was more on rather than off and the calmer European markets despite the sell off in China’s markets earlier today, meant there was less demand for safe havens. The yen was weaker and the euro was down as the dollar recovered after strong US durable goods data.

    The number of orders for goods lasting more than three years rose 4.9% in January, beating forecasts for a 2.5% rise and reversing December’s decline. Durable goods orders data are important since they are seen as a proxy for business investment, which is why this data took on more attention than initial jobless claims. Data showing applications for unemployment benefits were shrugged off despite the number rising last week by 10,000 to a seasonally adjusted 272,000. The figure was only slightly more than the 270,000 expected and also a number below 300,000 still indicates a solid labour market.

    The dollar rose against the yen after both data points which were released at the same time. USD/JPY came very close to the 113 yen level. Earlier in the European session the pair had briefly dipped below 112 yen.

    The euro was pushed below the $1.10 level as the dollar strengthened after the US data. Prior to the economic releases, the euro was mostly range-bound above $1.1000 but capped just below $1.1050. Data out of the Eurozone today showed January inflation was revised lower. The preliminary CPI reading was revised down to 0.3% from 0.4%. This raises concerns that the ECB may be pressured to take action at its March policy meeting and add more stimulus measures in order to fight low inflation.

    Sterling was stable today, trading in a range against the dollar just below the $1.40 level. The pair hovered near seven-year lows reached yesterday. Fourth quarter UK GDP data that was released today showed that the initial estimate of 0.5% was unrevised. This was a non-event as Brexit concerns continue to weigh on the British currency.

    Oil prices slid today to erase some gains made from yesterday’s rally. But both benchmarks showed prices remained above the key $30 a barrel level.

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