The dollar weakened against its peers today following the release of discouraging US data and as safe haven assets were supported by worry surrounding falling oil prices amid the global supply surplus. US consumer prices dropped 0.1% in December while experts forecast a flat reading. Core CPI rose by 0.1% just shy of expectations for an increase of 0.2%. US housing starts dropped 2.5% from 1.179 million units in November to 1.149 million units December while experts forecast an increase of 1.6% to total 1.200 million. US building permits dropped 3.9% from 1.289 million in November to 1.232 million in December while analysts expected a 6.4% decline to total 1.200 million. The US dollar index was down 0.26% trading at 98.92.
The euro weakened against the dollar with the pair trading at 1.0889 off its session low of 1.0877 after having come off its session high of 1.0975 reached earlier in the day. The euro changed course once again late in the US session as market outlook switched back to positive with oil prices and US stocks staging a rebound.
The pound weakened against the dollar with the pair trading at 1.4169 off its session high of 1.4218 after having come off its session low of 1.4124 reached earlier in the day. The pair traded at 7 year lows as the UK Office for National Statistics released data which revealed that the UK unemployment rate dropped to 5.1% in the 4th quarter marking a 9 year low. The number of employed individuals in the UK increased by 267,000 which was its 3rd largest recorded increase. Average weekly earnings excluding bonuses climbed by 1.9% edging out forecasts for a 1.8% increase. Wages including bonuses were up by 2.0% for the 4th quarter just shy of forecasts for a rise of 2.1%.
The yen strengthened against the dollar with the pair down 0.93% trading at 116.74 off its session low of 115.97 after having come off its session high of 117.67 reached earlier in the day. The yen was underpinned by safe haven demand as oil tanked to 12 year lows below $28 per barrel on the back of the International Energy Agency’s announcement which revealed that the global supply surplus is expected to remain towards the end of this year.
The Aussie was up against the dollar with the pair trading at 0.6919 off its session high of 0.6925 after having come off its session low of 0.6827 reached earlier in the day. The Aussie dropped to near 6 year lows on the back of poor Australian consumer sentiment data. The kiwi dollar was up against the greenback with the pair trading at 0.6427 off its session high of 0.6437 after having come off its session low of 0.6347 reached earlier in the day. The kiwi had fallen to 4 month lows as market outlook was dampened by global economic growth concerns.
The Canadian dollar strengthened against the greenback with the pair trading at 1.4493 off its session low of 1.4473 after having come off its session high of 1.4689 reached earlier in the day. Concerns regarding oil continued to put pressure on the commodity associated loonie against the dollar pushing the pair to new 13 year highs. The loonie managed to hold on to some support following an announcement from the Bank of Canada leaving its overnight cash rate unchanged at 0.5% as was widely anticipated by the market. The central bank’s view is that short term weakness of the US economy and lackluster business investment has in all likelihood impeded economic growth in the last quarter of 2015.
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