Forex

Dollar shored up by strong US data, commodity currencies sag

Reuters Tokyo | Updated on April 12, 2019 Published on April 12, 2019

The dollar was little changed at 111.72 yen after gaining 0.6 per cent overnight. File photo   -  Getty Images/iStockphoto

The pound was steady at $1.3053 after dipping 0.25 per cent the previous day against the broadly firmer dollar

The dollar held firm on Friday after strong United States (US) labour and inflation data soothed concerns about the world's largest economy, while falling oil prices weighed on commodity-linked currencies such as the Canadian and Australian dollars.

The dollar index against a basket of six major currencies was steady at 97.166 after climbing 0.25 per cent the previous day.

The index was headed for a weekly loss of 0.25 per cent, having stumbled at the start of the week as Treasury yields fell in the wake of a mixed March US non-farm jobs report.

Data released on Thursday showed first-time filings for US jobless benefits dropped to a 49-1/2-year low last week, pointing to sustained labour market strength. Overall producer prices increased 0.6 per cent in March, the largest rise since October.

The dollar was little changed at 111.72 yen after gaining 0.6 per cent overnight on the robust US data and the subsequent rise in US Treasury yields.

The greenback's advance, however, stalled ahead of the 112.00 yen threshold.

“Many market players had taken a bearish view on the dollar after the US CPI numbers released earlier in the week, but they were forced to abruptly cover short positions as Thursday's data proved to be strong,” said Takuya Kanda, general manager at Gaitame.Com Research Institute.

“The rise thus lacked conviction and it remains to be seen if the dollar can sustain its bounce. The prospect of a rate cut by the Fed may have diminished in light of the data, but economic views are not yet strong enough to support rate hike expectations,” Kanda said.

The dollar had sagged on Wednesday after a mixed report on domestic consumer prices reinforced the notion that underlying US inflation remains tame.

The pound was steady at $1.3053 after dipping 0.25 per cent the previous day against the broadly firmer dollar.

Volatility for sterling plunged after a midweek deal at an emergency European Union (EU) summit to postpone Britain's exit from the bloc to October 31 meant it would not crash out this week without a treaty to smooth its passage.

The Canadian dollar was more or less steady at C$1.3385 per dollar after shedding 0.5 percent the previous day as crude oil prices retreated from five-month highs.

The Australian dollar dipped 0.1 per cent to $0.7117 to extend losses from a day earlier, when it sank 0.7 per cent.

A decline in copper prices and political uncertainty were also seen weighing on the Aussie.

Australian Prime Minister Scott Morrison on Thursday announced a general election to be held on May 18.

The New Zealand dollar, also sensitive to shifts in commodity prices, slipped to $0.6714, its lowest since January 22.

The euro nudged up 0.1 per cent to $1.1262 after losing 0.2 per cent on Thursday. The single currency has risen about 0.4 per cent this week.

Published on April 12, 2019
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