Asian Session – Dollar consolidates rebound; aussie near 3 ½ year lows in quiet session
January 17, 2014 7:57 am
During the previous US session, the number of weekly new unemployment claims fell slightly, while inflation came in line with expectations at a 1.5% annual pace, which was characterized as relatively tame. The Philly Fed business survey index of conditions in the mid-Atlantic region, beat expectations by coming in at 9.4 vs 8.6 expected by economists and 6.4 during the previous month.
The dollar was little changed against the euro at 1.3614, as this week’s data and economic developments helped the greenback to make back all its losses from the previous Friday’s weak employment report.
The dollar traded unchanged versus the Japanese yen, remaining within a very narrow range near the 104.30 level during the US and Asian sessions.
One key factor that could moderate the yen’s slide moving forward was that US Treasury Secretary Jack Lew, appearing at the Council on Foreign Relations, said that Japan’s long-term growth cannot be rooted in unfair reliance on an exchange rate advantage.
It will be interesting to see whether other major countries share this view or whether the US becomes more serious about this issue. So far a depreciating yen has been one of the most important tools that the Abe government has used to rejuvenate the stagnant Japanese economy.
This was based on the implicit approval of other major trading economies to allow Japan to use this policy. Unilaterally weakening one’s currency on purpose can create tensions and frictions. Therefore, if such frictions start to emerge, it could become more difficult for Japan to drive the yen lower.
Sterling found itself under pressure and it is nowhere near the high level at which it started the year. It was down against the US dollar at 1.6330 and near Thursday’s low of 1.6316. Sterling could be influenced by the release of UK December retail sales released later on in the session at 0930 GMT.
Finally the Australian dollar was still under pressure at 0.8809 compared to a 3 ½ -year low of 0.8775 the previous day. According to analysts, the aussie was vulnerable to any further negative data releases out of China next week, which could drive it lower.
During the remainder of the day, there will be a flurry of data out of the United States such as housing starts and building permits at 1330 GMT, industrial output and capacity utilization at 1415 GMT and University of Michigan consumer sentiment (preliminary) at 1455 GMT.
During the previous US session, the number of weekly new unemployment claims fell slightly, while inflation came in line with expectations at a 1.5% annual pace, which was characterized as relatively tame. The Philly Fed business survey index of conditions in the mid-Atlantic region, beat expectations by coming in at 9.4 vs 8.6 expected by economists and 6.4 during the previous month.
The dollar was little changed against the euro at 1.3614, as this week’s data and economic developments helped the greenback to make back all its losses from the previous Friday’s weak employment report.
The dollar traded unchanged versus the Japanese yen, remaining within a very narrow range near the 104.30 level during the US and Asian sessions.
One key factor that could moderate the yen’s slide moving forward was that US Treasury Secretary Jack Lew, appearing at the Council on Foreign Relations, said that Japan’s long-term growth cannot be rooted in unfair reliance on an exchange rate advantage.
It will be interesting to see whether other major countries share this view or whether the US becomes more serious about this issue. So far a depreciating yen has been one of the most important tools that the Abe government has used to rejuvenate the stagnant Japanese economy.
This was based on the implicit approval of other major trading economies to allow Japan to use this policy. Unilaterally weakening one’s currency on purpose can create tensions and frictions. Therefore, if such frictions start to emerge, it could become more difficult for Japan to drive the yen lower.
Sterling found itself under pressure and it is nowhere near the high level at which it started the year. It was down against the US dollar at 1.6330 and near Thursday’s low of 1.6316. Sterling could be influenced by the release of UK December retail sales released later on in the session at 0930 GMT.
Finally the Australian dollar was still under pressure at 0.8809 compared to a 3 ½ -year low of 0.8775 the previous day. According to analysts, the aussie was vulnerable to any further negative data releases out of China next week, which could drive it lower.
During the remainder of the day, there will be a flurry of data out of the United States such as housing starts and building permits at 1330 GMT, industrial output and capacity utilization at 1415 GMT and University of Michigan consumer sentiment (preliminary) at 1455 GMT.
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