Dollar Retreats Broadly on Profit-Taking: May 27, 2016
Market Review - 26/05/2016 22:06GMT
Dollar retreats broadly on profit-taking
The greenback pushed lower against the other major currencies on
Thursday, as market participants continued to lock-in profits from the
dollar's recent rally, although the release of strong U.S. data added to
expectations for an upcoming U.S. rate hike.
Versus the Japanese yen, dollar came under renewed selling pressure at
110.23 ahead of Asian open on Thursday and then fell to as low as 109.42
shortly after Tokyo open. Later, despite an intra-day rebound to 110.11
in Europe and then 110.21 in New York morning following the release of
upbeat U.S. economic data, price fell to 109.59 due to another round of
broad-based selling in the greenback.
On the data front, U.S. Department of Labor said the number of
individuals filing for initial jobless benefits in the week ending May
21 decreased by 10K to 268K from the previous week's total of 278K.
Separately, the U.S. Commerce Department said durable goods orders rose
3.4% last month, compared to economists' expectations for an increase of
0.5%. Core durable goods orders, which exclude volatile transportation
items, rose 0.4% last month, compared to forecasts for a 0.3% gain.
Later, The U.S. National Association of Realtors said pending home sales
rose by 5.1% last month, beating expectations for a gain of 0.6% and
hitting the highest level in over a decade.
The single currency ratcheted higher after finding support at 1.1145
ahead of Asian open on Thursday and rose to 1.1192 in European morning.
Later, despite a brief retreat to 1.1159 in New York morning following
the release of upbeat U.S. data, price swiftly rose to a fresh session
high of 1.1217 before coming off to 1.1169.
The British pound turned lower after rising to a fresh 3-week peak
against the dollar on Thursday. During the day, although price edged
higher from Asian low at 1.4893 to a 3-week high at 1.4740 in European
morning, cable retreated to 1.4677 on downbeat business investment data.
Later, price recovered to 1.4711 but only to fall to a fresh session
low of 1.4640 in New York before recovering.
On Thursday, the Office of National Statistics said gross domestic
product growth slowed to 0.4% in the three months to March, from 0.6% in
the previous quarter. The annual rate of growth was revised down to
2.0% from 2.1% initially. In a separate report, data showed that
business investment fell during the quarter for the first time in three
years amid uncertainty over an upcoming referendum on Britain’s EU
membership. Business investment fell by 0.5%, driven by “falls in
non-residential building”, after rising 3.0% in the fourth quarter of
2015. Market had expected business investment to rise by 0.1%.
In other news, President and CEO of the Federal Reserve Bank of St.
Louis James Bullard said on Thursday, 'markets' expectation for policy
rate much shallower than FOMC's; markets expect "almost no
normalisation"; evidence from labour markets, inflation readings, global
influences suggest FOMC median projection may be "more nearly correct";
recent GDP readings, inflation expectations suggest markets' view of
policy rate path may be "more nearly correct".'
Data to be released on Friday:
Japan CPI, France consumer spending, consumer confidence, Swiss non-farm
payrolls, Italy business confidence, consumer confidence, U.S. GDP,
personal consumption expenditure and U Mich sentiment index
