We will expect weakness to continue in the greenback in the short term.
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Today’s focus will likely be on a potential continuation of weak stock markets overnight and the ISM Non-Manufacturing index and durable goods orders. Holdings are at their highest since December 2013. The US has posted disappointing growth data even amid nascent signs of recovery in Europe.
Gold steadied on Wednesday after soft private sector jobs data stoked expectations that Friday’s United States payrolls report will fall short of forecasts, dampening the prospect of a near-term hike in USA interest rates and weighing on the dollar.
In afternoon trade the dollar fell to ¥105.72 at one point, a fresh 18-month low, before edging up slightly to ¥106.81. It slumped 2% last week as the Bank of Japan’s inaction coincided with Fed Chair Janet Yellen reiterating she’s in no rush to cool the USA economy by raising borrowing costs.
GBP/USD is supported in the range of 1.4473 and now trading at 1.4533 levels. The greenback is wallowing at lows not seen since October 2014.
The Aussie currency took a hit after the Reserve Bank of Australia cut interest rates for the first time in a year, in a bid to combat record-low inflation and a strong local currency.
Expectations for higher rates in the USA have faded since the Fed’s meeting last week. They however emphasized on the improvement in labor market and less adverse headwinds in overseas markets.
Investors are hoping that monthly jobs data to be released on Friday will provide more clues to the health of the USA economy and the timing of another potential rate increase.
“The euro zone is looking in a better shape than it has been in”, said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. In the 12 months ended in March, (http://www.marketwatch.com/story/consumer-spending-rises-scant-01-in-march-2016-04-29) the Fed’s preferred inflation gauge, the PCE price index, fell to 0.8%, down from 1% in February.
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The euro EURUSD, +0.5722% last changed hands at $1.1590, rising 0.6% from late Monday.
