FOREX: U.S Dollar Gains Against Major Currencies
After momentarily slippage, the U.S dollar stabilized into Thursday ahead of a data schedule and more Fed speaks, with the outlook for the United States positive relative to other countries, data. In the currency market, the greenback recorded gains against major currencies including British Pounds, Euro, Japanese Yen and Canadian dollar.
Thursday’s GDP and jobless claims releases are the data highlights of the day, but the markets will also be looking ahead to Friday’s release of the PCE price measures, the Federal Reserve’s favoured inflation measures.
The calendar of Fed speakers is also heavy on Thursday, though the speeches this week, including Fed Chair Jerome Powell’s testimony, have added little to last week’s Federal Open Market Committee (FOMC) meeting statement that showed there has been some progress toward future tapering, but a reluctance to say how much. Much of the immediate impact from last week’s statement has been walked back by the speeches this week.
A quick summary of foreign exchange action shows EUR-USD has lifted back to levels around 1.1950 from sub-1.1920 levels, though has so far remained shy of Wednesday’s rebound high at 1.1970. The German Ifo business confidence surged to 101.8 in the June headline, up from 99.2 in May.
The data was much stronger than expected, though not a total surprise after the stellar PMI readings Wednesday. EUR-USD remains down by about 1.5% on the levels ahead of the FOMC statement last week.
USD-JPY has slipped modestly after posting a 15-month high at 111.11. The shift higher in US versus Japan yield differentials has been a supportive factor for the pairing after the FOMC meeting. Buoyancy in global stock markets has contributed to yen underperformance this week, with more upside seen for the pair going forward.
GBP-USD retreated to the mid-1.3900s after printing a one-week high just above 1.4000 Wednesday. The Bank of England’s policy announcement included an upward adjustment to inflation expectations, but no shift in policy, similar to the FOMC’s slightly more hawkish stance.
The Bank of England has already hinted that it could be until September, when the government’s pandemic support measures are due to expire, before it gets a clear picture of what the post-crisis economy looks like and set policy accordingly. In the meantime, the effects of strong data are being offset by the impact of the delay in full reopening until July.
USD-CAD stabilized after dropping sharply from Monday’s peak at 1.2487 to Wednesday’s low at 1.2250. The FOMC statement tilted interest toward the dollar but rising oil prices will shift them back toward CAD until a possible OPEC production increase in August.
FOREX: U.S Dollar Gains Against Major Currencies
