News Column

US Dollar Advances Against Majors

May 28, 2014

CANBERA (Alliance News) - The US dollar climbed against the other major currencies in European deals on Wednesday, as yesterday's upbeat economic data underpinned hopes of rebound in economic growth this quarter.

The US durable goods orders rose unexpectedly in April and home prices rose more than expected in March, while consumer confidence grew in line with forecasts in May, separate reports showed yesterday, adding to optimism about ongoing economic recovery.

Traders await data on US economic growth and jobless claims due tomorrow for further direction.

The US weekly jobless claims are expected to show a decline of 317,000 in the week ended May 24, versus previous week's figures of 326,000.

The second estimate may show a contraction in US GDP to 0.5% in the first quarter, following a 0.1% annualized growth estimated earlier.

In a speech at Louisiana State University'sGraduate School of Banking, Atlanta Federal Reserve Bank President Dennis Lockhart said yesterday that the Federal Reserve might raise rates in second half of next year, if the economic growth gathers pace.

The greenback spiked up to 0.8990 against the franc for the first time since February 13. If the greenback extends gain, it may face resistance around the 0.905 zone.

Switzerland's economic growth accelerated in the first quarter underpinned by strong external demand, the State Secretariat for Economic Affairs said today.

Real gross domestic product increased 0.5% sequentially, after rising 0.2% in the fourth quarter of 2013.

The greenback advanced to 1.3605 against the euro, a level not seen since February 13. On the upside, the greenback is likely to seek resistance at the 1.355 mark.

Eurozone economic sentiment improved more than expected in May driven by higher confidence among consumers and industry managers, survey results showed today.

The economic sentiment index rose to 102.7 in May from 102 in April, the European Commission said. The score stood above the expected level of 102.2.

The greenback hit a near 2-week high of 1.6742 against the pound, off early low of 1.6816. The next possible upside target for the greenback lies around the 1.66 level.

British retail sales increased for the sixth straight month in May, but at a slower pace than in April, the latest quarterly Distributive Trades Survey from the Confederation of British Industry showed today.

A balance of +16% said retail sales volume increased in May from last year, which was above expectations of +43%.

The greenback bounced off to 101.99 against the yen from an early low of 101.80. Further recovery may see the greenback finding resistance around the 102.5 region.

Bank of Japan Governor Haruhiko Kuroda said the central banks learned from the global financial crisis that it is possible to implement monetary easing even in a situation where the policy rate is around zero %.

After exhausting conventional policy measures of lowering rates virtually to the zero lower bound, central banks in advanced nations introduced unconventional tools such as asset purchases and forward guidance, Kuroda noted.

The greenback hit a 5-day high of 0.9226 against the aussie, after having declined to 0.9272 at 1:50 am ET. The greenback is likely to find resistance at the 0.91 area.

Reversing from an early low of 0.8572 against the NZ dollar, the greenback strengthened to a 2-1/2-month high of 0.8483. The greenback may possibly target resistance at the 0.84 zone.

The US currency recovered its lost ground against the loonie with pair trading at 1.0867, off its previous low of 1.0841. The greenback may test resistance around the 1.096 level.

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Source: Alliance News

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