Asian Session – Dollar weakens on falling US yields as soft data hurts sentiment
January 24, 2014 7:36 am
Investors were generally avoiding risk today, as damp sentiment followed through from the US session after disappointing US data. As a result the US dollar was broadly weaker against most of its major counterparts while safe haven flows went to currencies like the yen. Falling US Treasury yields didn’t help the dollar.
Meanwhile, Chinese manufacturing data from yesterday indicating a slowdown in the world’s second largest economy also led to a risk-off mood.
On Thursday, US weekly initial jobless claims rose in the week ending January 18, up 1,000 claims to 326,000 compared to a previous 325,000. Other data showed that US manufacturing activity dropped unexpectedly in January to a 3-month low. Meanwhile, data showing existing home sales rose less-than-expected to a 4.87 million annualized pace versus a 4.94 forecast. Finally, the Chicago Fed national activity index also eased in January.
The dollar plunged to a low of 102.96 yen after the data late on Thursday, and was bought on the dip in Asia. The dollar attempted to recover some losses versus the yen and there was some upside momentum to 103.35 yen, giving the pair a 0.10% gain in the Asian session.
The euro consolidated gains made yesterday when it was propelled to a 2-week high against the dollar on the back of upbeat manufacturing and services activity data from the Eurozone. Other data indicated that consumer confidence in the region improved more than forecast in January, also helping buoy the euro.
The euro opened in Asia at 1.3696 just shy of last night’s 1.3699 high and remained above 1.3680 throughout the Asian session. The pair gave up some gains on profit-taking to end the session down 0.09%.
Sterling remains strong, buoyed by upbeat UK jobs data on Wednesday which showed the unemployment rate dropped to 7.1% from 7.4% the three months to December.
The pound opened in Asia at 1.6635 after reaching a more-than-2-1/2 year high of 1.6642 late on Thursday. The pair consolidated these gains in Asia, finding support around 1.6620. Cable ended the session down 0.10%.
The Australian dollar extended losses against its US counterpart, falling to the lowest since July 2010. AUD has lost over 1% in the last 24 hours, reaching as low as 0.8688 and ending the session at 0.8707 with a 0.68% loss.
Yesterday’s weak China manufacturing data is weighing on the aussie. China is a major trading partner for Australia. Acting as a catalyst for the aussie’s decline today were comments by Reserve Bank of Australia board member Heather Ridout who said the currency had not fallen enough. She believes an exchange rate of 80 U.S. cents would be a “fair deal” for the economy.
Investors were generally avoiding risk today, as damp sentiment followed through from the US session after disappointing US data. As a result the US dollar was broadly weaker against most of its major counterparts while safe haven flows went to currencies like the yen. Falling US Treasury yields didn’t help the dollar.
Meanwhile, Chinese manufacturing data from yesterday indicating a slowdown in the world’s second largest economy also led to a risk-off mood.
On Thursday, US weekly initial jobless claims rose in the week ending January 18, up 1,000 claims to 326,000 compared to a previous 325,000. Other data showed that US manufacturing activity dropped unexpectedly in January to a 3-month low. Meanwhile, data showing existing home sales rose less-than-expected to a 4.87 million annualized pace versus a 4.94 forecast. Finally, the Chicago Fed national activity index also eased in January.
The dollar plunged to a low of 102.96 yen after the data late on Thursday, and was bought on the dip in Asia. The dollar attempted to recover some losses versus the yen and there was some upside momentum to 103.35 yen, giving the pair a 0.10% gain in the Asian session.
The euro consolidated gains made yesterday when it was propelled to a 2-week high against the dollar on the back of upbeat manufacturing and services activity data from the Eurozone. Other data indicated that consumer confidence in the region improved more than forecast in January, also helping buoy the euro.
The euro opened in Asia at 1.3696 just shy of last night’s 1.3699 high and remained above 1.3680 throughout the Asian session. The pair gave up some gains on profit-taking to end the session down 0.09%.
Sterling remains strong, buoyed by upbeat UK jobs data on Wednesday which showed the unemployment rate dropped to 7.1% from 7.4% the three months to December.
The pound opened in Asia at 1.6635 after reaching a more-than-2-1/2 year high of 1.6642 late on Thursday. The pair consolidated these gains in Asia, finding support around 1.6620. Cable ended the session down 0.10%.
The Australian dollar extended losses against its US counterpart, falling to the lowest since July 2010. AUD has lost over 1% in the last 24 hours, reaching as low as 0.8688 and ending the session at 0.8707 with a 0.68% loss.
Yesterday’s weak China manufacturing data is weighing on the aussie. China is a major trading partner for Australia. Acting as a catalyst for the aussie’s decline today were comments by Reserve Bank of Australia board member Heather Ridout who said the currency had not fallen enough. She believes an exchange rate of 80 U.S. cents would be a “fair deal” for the economy.
Related Posts: