The dollar came off recent highs against its peers today on thin volume traded however was still supported by increasing predictions that the Federal Reserve will increase rates soon. The market grew optimistic that the US economy would maintain its current trajectory of recovery following recent economic data which revealed a down turn at the beginning of the year. The US dollar index posted a reading of 99.74 just shy of its 1 month high of 100.27.
The euro weakened against the dollar with the pair trading at its 1.05 handle not far from its 1 month low of 1.0521. Continuing doubt surrounding whether Greece will secure its bailout put further pressure on the euro. Greek officials have yet to have their proposed economic reforms approved by creditors. The euro has declined approximately 13% since the beginning of this year following the European Central Bank’s introduction of its stimulus program.
The pound strengthened against the dollar coming off its 5 year low of 1.4566. Data released out of the UK on Friday which revealed that UK industrial production ticked up by 0.1% in February compounding expectations of a 0.4% increase continued to weigh down the pound. The discouraging data generated pessimism over UK economic growth for the first quarter of this year. The pound also strengthened against the euro.
The yen held its ground against the dollar with the pair seeing some volatility today coming close to testing its 121 handle. Koichi Hamada, Japanese Prime Minister Abe’s advisor, made comments today which triggered the volatility. Hamada stated that the Bank of Japan’s monetary policy is achieving its desired results, that as Japanese stock prices increase so will consumption, and that yen at 120 is weak given purchasing parity and at 105 is appropriate. The pair declined following the remarks but soon bounced back.
The Australian, New Zealand and Canadian dollars were considerably weaker against the greenback. The Aussie and kiwi dollars tanked roughly 1.5% while the loonie lost roughly 0.2%. These commodity and export associated currencies grew vulnerable following the release of data which revealed that China’s trade surplus decreased from $60.6 billion in February to $3.08 billion in March. Experts had forecast the trade surplus to drop to $45.35 billion in March.
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