The U.S dollar hovered near a two-week low against a basket of currencies yesterday, as profit-taking and weakness in U.S. yields exerted pressure. Market participants were hesitant to place big directional bets ahead of the Federal Reserve’s meeting minutes later in the day, and the dollar traded little changed against most of the majors. The U.S Dollar Index, which measures the greenback against a basket of six currencies, was 0.101% lower at 92.213. The dollar has appreciated this year along with Treasury yields as investors bet the United States would recover more quickly from the COVID-19 pandemic than other developed nations. But the dollar index’s 2.5% gain in March, the biggest monthly increase since the end of 2016, prompted some traders to book profits. The weakness in Treasury yields after their rapid rally this year also added pressure on the dollar. All of this has left investors wondering if the dollar weakness, which sent the currency to a near 3-year low earlier this year, may be set to resume. Upbeat European data yesterday showing euro zone business activity bounced back to growth last month, also supported the common currency against the greenback. Investors will be scanning the minutes in search of any ‘discomfort’ among policymakers about rising inflation prospects and in parallel any hint that the discussion is migrating towards defining a timeline for tapering asset purchases. Euro zone business activity bounced back to growth last month, underpinned by a record expansion in manufacturing, according to a survey yesterday that also showed the service industry was coping better than expected with new lockdowns. Europe is battling a third wave of coronavirus infections and governments - also struggling with vaccine programs beset by delays - have re-imposed curbs on citizens and forced swathes of the dominant services industry to remain closed. But IHS Markit’s Services Purchasing Managers’ Index (PMI) rose to 49.6 in March from February’s 45.7, much higher than a flash estimate of 48.8 and only just shy of the 50 mark that separates growth from contraction. Despite the health situation remaining fragile and some restrictions being extended, optimism about the vaccine campaigns sends some hopes for the services sector outlook. A composite PMI, combining manufacturing and services and seen as a good gauge of economic health, rose to 53.2 from 48.8, above the 52.5 preliminary estimate. The Canadian dollar fell yesterday, hurt by a third wave of the COVID-19 pandemic in the country.
Euro
The single currency traded higher yesterday as Euro zone business activity bounced back to growth last month, underpinned by a record expansion in manufacturing, according to a survey that also showed the service industry was coping better than expected with new lockdowns. IHS Markit’s Services Purchasing Managers’ Index (PMI) rose to 49.6 in March. Overall, the EUR/USD traded with a low of 1.1859 and a high of 1.1913 before closing the day around 1.1865 in the New York session.
Yen
The Japanese Yen traded higher as profit-taking in the U.S Dollar and weakness in U.S yields exerted pressure. Market participants were hesitant to place big directional bets ahead of the Federal Reserve’s meeting minutes later in the day, and the dollar traded little-changed against most of the majors. Overall, the USD/JPY traded with a low of 109.55 and a high of 109.92 before closing the day around 109.82 in the U.S session.
British Pound
The British Pound sank as profit-taking by traders after a strong first quarter for the British currency pulled it to its lowest in over four weeks against the euro and a week’s low against the dollar. Expectations of an economic rebound in Britain, spurred by rapid COVID-19 vaccinations, helped sterling to record its best quarter since 2015 versus the euro. Overall, the GBP/USD traded with a low of 1.3722 and a high of 1.3837 before closing the day at 1.3735 in the New York session.
Canadian Dollar
The Canadian Dollar weakened to a one-week low as commodity-linked currencies broadly lost ground and domestic data showed the trade surplus narrowing in February. Canada's trade surplus with the world narrowed in February to C$1 billion as a global shortage of semiconductor chips hit both imports and exports. Overall, USD/CAD traded with a low of 1.2560 and a high of 1.2632 before closing the day at 1.2606 in the New York session.
Australian Dollar
The Australian Dollar began yesterday's session under pressure after overnight activity and this theme has largely continued through the day as well. Both the Australian and New Zealand dollars fell about 0.7%, giving back some recent gains. Like Canada, Australia and New Zealand are major commodity exporters. Overall, AUD/USD traded with a low of 0.7598 and a high of 0.7675 before closing the day at 0.7612 in the New York session.
Euro-Yen
EUR/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is issuing a bearish stance. The Relative Strength Index is above 60 and lies above the neutral zone. In general, the pair has gained 0.05%.
Sterling-Yen
Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 50 reading and lies above the neutral zone. On the whole, the pair has lost 0.54%.
Aussie-Yen
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 51 reading and lies above the neutral region. In general, the pair has lost 0.57%.
Euro-Sterling
This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bullish signal. The Relative Strength Index is above 56 and lies below the neutral region. Overall, the pair has gained 0.58%.
Sterling-Swiss
This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 45 and lies above the neutral region. In general, the pair has lost 0.75%.
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
Disclaimer
This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.
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