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Asian Session – Dollar bounces back after soft ISM, Yellen vote passes
January 7, 2014 8:14 amVideo
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The US dollar bounced back against the yen to recover losses made after disappointing US PMI data. On Monday, two reports showing service sector activity showed a slowdown in December.
The more important ISM non-manufacturing PMI surprisingly declined in December to 53.0 despite forecasts for an increase to 54.5. The previous reading was at 53.9. Meanwhile a separate report from Markit showed the final services PMI reading for December fell slightly to 55.7 from 56.0.
In other news, late on Monday the US Senate confirmed Janet Yellen to be the next Chairperson of the Federal Reserve, replacing outgoing Ben Bernanke in February.
Currency markets showed limited movement due to the light newsflow in the Asian session and most pairs consolidated or retraced previous day’s moves.
The dollar eked out gains against the yen to end the Asian session up 0.20% to 104.42, recovering from Monday’s fall to 103.90 following the weak ISM data.
The euro edged up 0.14% to 142.18, rebounding from Monday’s low of 141.48 but far below a 5-year high of 145.65 set in December.
The euro stabilized against the dollar during the Asian session, mostly stuck in a range between 1.3632 and 1.3609. The euro ended the session lower at 1.3617, down 0.07% but off yesterday’s 1-month low of 1.3570.
The euro received some support on Monday following some better-than-expected Euro zone sentiment data, which contrasted with the disappointing US ISM data. Also some upbeat Euro zone services PMI data early on Monday, especially from Spain and France helped lift the euro.
The Australian dollar fell despite upbeat Australian trade balance data which showed a much smaller-than-expected deficit in November. The Australian dollar eased down 0.48% to 0.8919.
Looking ahead to the European session, Euro zone CPI data will be in focus, as well as German unemployment numbers.
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