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    Asian Session – Dollar pulls back from highs as yen firms; kiwi jumps on RBNZ house price concerns

    The US dollar eased from its highs following a two-day rally as profit taking dragged the currency lower in Wednesday’s Asian session. The greenback came off from its peak against the yen at the start of Asian trading as it retreated from 109.36 yen to around 108.67 yen in late session.

    The yen found some support on Wednesday as the threat of immediate intervention receded. Many investors doubt whether the Japanese government would risk intervening in the currency markets before the G7 summit later this month, given the opposition to such a move by the United States.

    The euro and the pound also pared back their recent gains against the yen, easing to 123.85 and 157.19 yen respectively.

    The Australian dollar received a boost earlier today from a rise in the Westpac consumer sentiment survey. The index increased to 8.5% in May from -4.0% in April, helping the aussie to climb to 0.7390 against the greenback, before easing to around 0.7359 in late session.

    The New Zealand dollar was even more buoyant on Wednesday as a fresh warning by the country’s central bank on soaring house prices dampened expectations of further rate cuts anytime soon. The Reserve Bank of New Zealand said in its bi-annual financial stability report that imbalances in the housing market have increased. However, the RBNZ failed to follow up with fresh measures to curb lending and this put into question the likelihood of a June rate cut.

    The kiwi jumped to 0.6825 after the report but had come down to 0.6793 in late Asian trading.

    In European currencies, the euro was attempting to break above 1.14 dollars again and was trading just below it in late session, while sterling was steady around 1.4430 dollars.

    Oil prices came under pressure yesterday after data from the American Petroleum Institute showed US crude stocks rose by more than expected last week. WTI futures were last down 0.9% at $44.25 a barrel. Lower oil prices weighed on the Canadian dollar, which gave back some of yesterday’s sharp gains to ease to 1.2925 per US dollar in late Asian trading.

    Looking ahead to the rest of the day, it will be relatively quiet with UK industrial and manufacturing output figures being the main data of the day. The latest US oil inventory data from the EIA will also be eyed.

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