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    European Session – Dollar gains over 1 percent on yen

    The US dollar was broadly stronger on Monday and gained over 1 percent versus the Japanese currency to 108.59 yen.

    The absence of key US data today helped the greenback extend gains from Friday after the currency recovered swiftly from the soft nonfarm payrolls data, with the help of comments from New York Fed President William Dudley. His comment that it was reasonable to expect two Fed rate hikes this year lent support to the greenback. The diverging monetary policies of the US central bank with other major ones like the ECB, Bank of England and Bank of Japan are also helping the dollar gain ground against its peers. Meanwhile, verbal intervention by Japanese Finance Minister Taro Aso today who warned that the BoJ was ready to intervene in the currency market if needed led to a weaker yen versus the dollar.

    Economic data out the Eurozone consisted of German manufacturing orders which rose 1.9% month-on-month in March, following a revised 0.8% decrease in February and beat expectations for a 0.6% rise. The upbeat data did little to move the euro which was consolidating last week’s losses versus the dollar around the $1.14 mark. Dovish comments from ECB’s Constancio today likely weighed on the single currency, as did news of a failure to reach a deal at a Eurogroup meeting in Brussels today on the Greek bailout.

    Sterling made some interesting moves today, rising from $1.4373 to a high of $1.4478 before falling back down to test the key $1.44 level. Data out of the UK today included the Halifax house price index which fell 0.8% month-on-month in April, following a 2.6% increase in March. It was larger than the 0.4% expected drop. The highlight of the week for the pound will be Thursday’s Bank of England meeting followed by Governor Mark Carney’s press conference, and the release of the BoE quarterly inflation report.

    Canada published housing starts data which slowed in April to the lowest level in three months at a total of 191,512 units from 202,375 units in March, and below the 195,000 expected. The Canadian dollar weakened after the data but the currency was already under pressure due to the wildfires in oil-rich Alberta in the past few days, resulting in a disruption in oil production and deliveries. USDCAD rose to a one-month high of $1.2991. Meanwhile, oil prices erased Friday’s gains which took futures prices to $45 a barrel, only to drop to $44 today.

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