Coming Up Today (all times GMT)
- CAD Trade Balance (12:30)
- USD PPI m/m (12:30)
- USD Trade Balance (12:30)
- USD Unemployment Claims (12:30)
- USD Natural Gas Storage (14:30)
- USD Crude Oil Inventories (15:00)
The US Dollar Index, a measure of greenback strength against a basket of six major currencies, dropped by around 0.7% to below 76.50, marking a 10-month low, as the “QE music” continues to play in investor’s minds. Furthermore, on Thursday, a move by Singapore to widen the trading band of its currency against the dollar, pushing the Singaporean Dollar to a new high, probably added to the selling pressures on the US Dollar.
Today markets will be mostly focusing on the release of the US Weekly Unemployment Claims, in order to get more indications on the health of the US economy. Also coming from the US, reports on the PPI and the Trade Balance could tell us more whether a weakening dollar has contributed to both an increase in the inflation level and the US exports. As such, they could be useful indicators for the Fed when it decides if it is actually going forth with assets purchases and to what extent.
The euro climbed by more than 0.8% to just a breath below $1.41, reaching an 8-month high against the dollar as technical and fundamental factors led to more greenback weakness across the board. Some analysts seem to think that after clearing the 1.4025-1.4045 level, the pair could be looking for more gains with next significant targets eyed at around 1.42.
The cable also strengthened to hit resistance at 1.60, as risk appetite remained at elevated levels, although not as much as the EUR/USD. Indicative of this uneven strength is the fact that the EUR/GBP cross rate successfully broke above the 0.88 level. This may be partly explained by the weakness in the UK jobs number on Wednesday, which could be used as one of the arguments in favor of more QE from the BoE.
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