The U.S. dollar continued its winning streak against its major currency rivals, as the U.S. data came in mostly better than consensus. Both Philly Fed index and the existing home sales report beat expectations, with the manufacturing index landing back in the positive region indicating industry expansion. However, initial jobless claims came in worse than estimated, also posting a higher figure compared to the previous week. There are no reports due from the U.S. today so dollar behavior could be dictated by risk flows and market sentiment.
The euro slid lower against the U.S. dollar, as EUR/USD dipped below the 1.3200 mark briefly. Euro zone PMI figures came in mostly better than expectations, with only the German manufacturing PMI slipping below the estimate. German services PMI made up for this, as the figure landed back above the 50.0 mark, indicating that the industry grew during the month. For today, only the current account and ECOFIN meetings are scheduled for the euro zone, and these aren’t likely to have a huge impact on euro price action.
The pound lost ground to the dollar, despite the stronger than expected U.K. retail sales figure. Consumer spending increased by 2.1%, much higher than the estimated 0.8% rebound. Against the yen, the pound was able to post some gains. For today, only the public sector net borrowing report is due from the United Kingdom, and the report is slated to print higher borrowing of 12.7 billion GBP. A higher than expected borrowing figure might force the pound move south.
The Japanese yen had a mixed performance yesterday, as it gained against the commodity currencies but lost ground to the dollar, euro, and pound. There were no reports released from Japan then, which explains why the Asian currency had no clear direction. Today, BOJ Governor Kuroda is set to give a speech, in which he could defend the BOJ’s quantitative easing program.
USD/CHF rallied at the start of the day, but resistance at .9350 held and pushed the pair right back down. There were no surprises from the SNB monetary policy announcement, as the Swiss central bank simply reiterated its pledge to maintain the franc peg and kept interest rates unchanged. There are no reports due from Switzerland today.
Commodity Currencies (AUD, CAD, NZD)
Commodity currencies suffered in yesterday’s trading as the weak Chinese HSBC manufacturing PMI weighed on risk sentiment. AUD/USD continued to tumble below the .9200 handle while USD/CAD edged closer to the 1.0400 mark. There are no reports due from New Zealand or Australia, but Canada is set to print its CPI and retail sales data in today’s U.S. session. Weak data could push USD/CAD to the 1.0400 mark while strong reports could trigger a downside break from the current consolidation.
By Kate Curtis from Trader's Way