News Column

US Dollar Retreats Against Majors

August 25, 2014

BRUSSELS (Alliance News) - The US dollar retreated from its early highs against the other major currencies in the Asian session on Tuesday, as traders took some profits off the table, after a strong rally in recent sessions.

The currency's recent strength was presmised on the Fed's interest rate outlook and some strong domestic data.

On Monday, the greenback was up 0.40% against the euro, 0.07 against the pound, 0.16 against the yen and 0.07 against the Swiss franc.

The Federal Reserve Bank of Kansas City's annual Jackson Hole symposium wrapped last Friday and signaled policy divergence among the global central banks.

Fed Chair Janet Yellen, one of the dovish Fed policymakers, was more balanced than expected in her speech at Jackson Hole. She reiterated her view that there is still significant slack in the US labour market. Yellen suggested that increases in the Federal funds rate target may come sooner than the Federal Reserve Open Market Committee currently expects and could then proceed at a more rapid pace.

Pledges of stimulus from European Central Bank President Mario Draghi and Bank of Japan governor Haruhiko Kuroda weakened the respective currencies, providing a shot in the arm for the dollar.

The US dollar fell to 4-day lows of 103.74 against the yen and 0.9140 against the Swiss franc, from early highs of 104.11 and 0.9163, respectively. If the greenback extends its downtrend, it is likely to find support around 102.69 against the yen and 0.90 against the franc.

Pulling away from an early near 1-year high of 1.3178 against the euro, the greenback edged down to 1.3207. At yesterday's close, the greenback was trading at 1.3191 against the euro. The greenback may test resistance near the 1.33 region.

Against the pound, the greenback edged down to 1.6594 from an early high of 1.6565. The pair closed yesterday's deals at 1.6577. The greenback is likely to find support around the 1.66 region.

Looking ahead, the British Bankers' Association will release its July mortgage approvals report at 4:30 am ET.

In the New York session, US durable goods orders for July, house price indexes for June based on two separate surveys by the Federal House Finance Agency and the S&P/Case-Shiller and consumer confidence index for August are due to be released.

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Source: Alliance News

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