The dollar weakened against its peers today giving back gains following the release of data which revealed that New York area manufacturing conditions deteriorated suddenly in April and that US industrial output declined greater than forecast for March. The greenback came off session highs as the Federal Reserve Bank of New York reported that its general business conditions index dropped from 6.9 in March to a reading of -1.2 in April, compounding forecasts for an uptick to 7.0. Industrial output dropped 0.6% in March worse than forecasts for a 0.3% decrease while manufacturing production ticked up 0.1% in March matching expectations.
The euro strengthened against the dollar with the pair coming off its low of 1.0572 set earlier in the session. The euro regained ground following an announcement from European Central Bank President Draghi which minimized talk of the central bank possibly reducing the scope of its asset purchase program due to indications of economic recovery within the euro zone. The ECB left its key interest rate unchanged at 0.05% as was widely expected.
The pound held its ground against the dollar which had advanced after recovering from yesterday’s weak US data to pare gains following today’s. Markets were left on edge on the back of China’s GDP figures highlighting its slowest growth rate in 6 years. The pound had weakened yesterday following data which revealed that the UK annual rate of inflation stayed at zero for February and March matching analyst predictions.
The yen strengthened against the dollar with the pair still trading in its tight range with a high of 119.74 and a low of 118.79. Traders still await a breakout from its too narrow range for price action to signal better opportunities. The pair could break through on the possibility the Bank of Japan introduces additional stimulus measures in the near term. Policy outlook continues to differ between the Fed and the BOJ, with the Fed possibly increasing rates and the BOJ introducing additional stimulus.
The Australian dollar held its ground while the New Zealand dollar strengthened against the greenback. The Aussie and kiwi dollars met some resistance earlier in the session following the release of data which revealed that China?s economy expanded by 7.0% in the first quarter of this year in line with expectations marking a 6 year low.
The Canadian dollar strengthened against the greenback following the Bank of Canada’s announcement to keep its overnight cash rate unchanged at 0.75% which was widely predicted by the market. The announcement was released soon after data had revealed that Canadian manufacturing sales declined 1.7% in February while analysts forecast a 0.2% decrease.
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