USD

[Syed]

Dollar pares gain against major rivals after soft U.S. data
The dollar paredd gains against major rivals on Wednesday, after data showed that manufacturing conditions in the New York area shrinked unexpectedly in April and that U.S. industrial production droped more than expected last month.
In a report, the Federal Reserve Bank of New York said that its general business conditions index decreased to -1.2 this month from a reading of 6.9 in March. Analysts had expected the index to inch up to 7.0 in April.
Data also showed that U.S. industrial production declined 0.6% last month, worse than expectations for a drop of 0.3%. Industrial production rose by 0.1% in February.
Meanwhile, manufacturing production inched up 0.1% in March, in line with forecasts and following a drop of 0.2% in February.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.20% to 99.21, after hitting 99.57 earlier in the session.

[Syed]

Dollar extends losses on soft U.S. employment report
The dollar extended losses against major rivals on Thursday, as the release of soft U.S. data fuelled further uncertainty over the strength of the economy and the timing of a rate hike.
In a report, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending April 11 increased by 12,000 to 294,000 from the previous week’s total of 282,000. Analysts had expected initial jobless claims to fall by 2,000 to 280,000 last week.
Separately, the U.S. Commerce Department said that the number of building permits issued in March declined by 5.7% last month to 1.039 million units from February’s total of 1.102 million. Analysts expected building permits to fall by 2.0% to 1.080 million units in March. The report also showed that U.S. housing starts rose by 2.0% in March to hit 926,000 units from February’s total of 908,000 units, below expectations for an increase of 15.9% to 1.040 million.

[Yousuf Ali]

The dollar dropped the most in almost two weeks on concern the US economy, one of the strongest among developed countries, has lost traction this year.

The greenback fell against all of its major peers as reports on housing starts and jobless claims were weaker than projected, adding to below forecast readings for American factories, payrolls and retail sales. The dollar’s decline was the most pronounced against so-called commodity currencies, including the Swedish krona and Australia’s dollar.

The market has been recognizing that first quarter is slower than the fourth. In recent weeks it has stalled the rally.

The dollar slumped 1.6 percent against the krona and the Aussie on signs that economies of commodities-producing nations are firming. Australia added twice as many jobs last month as analysts forecast. The dollar dropped 0.7 percent to $1.0761 per euro and fell 0.1 percent to 119.02 yen.

[Syed]

Dollar pares losses against major rivals in low volume trading
The dollar pared losses against major rivals in low volume trading on Monday, as the dollar recovered from the previous week's lack luster U.S. data and as trading volumes were expected to remain light with no major U.S. data to be released.
Dollar remained under pressure from uncertainty over higher U.S. interest rate after recent run of soft economic data. Investors ignored data on Friday showing that U.S. consumer prices were higher for a second successive month in March. The consumer price index edged up 0.2% last month, matching a similar gain in February. On a year-over-year basis, consumer prices dipped 0.1% in March after remaining flat in February.
Core consumer prices, which exclude food and energy costs increased 0.2% in March for an annual increase of 1.8%, the largest since October. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.39% to 98.00.

[Yousuf Ali]

The US dollar index gained against the basket of currencies on April 23, 2015. The index gained on the consensus of the improving US economy-driven by data on previously owned home sales climbing to the highest level since September 2013. The estimates were reported by the NAR on Wednesday, April 23, 2015. The appreciating dollar makes gold expensive.

April gold futures prices fell for the sixth day in the last ten trading sessions. During the same period, prices increased 0.02% more on the average up days than on the down days. Nickel was the top performer in yesterday’s trade. However, gold had an average performance at the close of trade.

April gold futures prices increased by 0.24% YTD led by improving demand from china. Gold prices are in a downtrend due to the strong dollar and weak global demand.

[mirza ally]

What about the dollar as a safe haven?

Other perceived safe havens, such as the dollar, have also been more volatile. Historically, the dollar has been expected to remain stable and retain its purchasing power when other currencies decline. Ever since the Second World War, which created a system of fixed exchange rates, many countries have been compelled to purchase dollars for their foreign exchange reserves, while many of their commodities are denominated for foreign trade, which has buoyed the dollar’s value, and its safe haven reputation.


In times of turmoil, the dollar and US Treasury bills have behaved in a similar way to gold – as investors run to them in perceived economic chaos as part of a flight to quality.
However, since the financial crisis, the dollar’s reputation as a safe haven currency has also been damaged while the link between dollar strength and the flight to US Treasuries has also decreased.

[Yousuf Ali]

Any disappointing in today’s US data releases – May Empire survey and Industrial Production, might confirm the faltering US growth story.

It is a heavy data day in North America but and we will be loosely watching the May empire survey and the April industrial production figures. The former disappointed by a wide margin in April so it will be closely watched if a rebound fails to materialize as much of the market expects it will.

Similarly, the industrial production figures are expected to be soft and disappointment here may rattle the market perhaps to a similar degree as retails sales did earlier this week as it will probably be viewed as further confirmation that the US growth story is faltering.

[Yousuf Ali]

The dollar held near one-month highs against a basket of major currencies early on Tuesday, having remained bid in a session made sluggish by public holidays in the United States and Britain. The dollar index DXY last traded at 96.381, not far from a high of 96.475 set late in the Asian session on Monday, when dollar bulls were still cheering comments from Federal Reserve Chair Janet Yellen.

In a highly anticipated speech on Friday, Yellen made clear the central bank was poised to raise interest rates this year. She said recent softness in economic data was largely due to transitory factors including a harsh winter and labor disputes on west coast ports. The central scenario still points to a September lift-off.

That leaves the USD bulls marginally with the upper hand, we say marginally because markets are already largely expecting the same and you need something additional to trigger fresh momentum. Yet, Yellen was quick to stress that incoming economic data will be vital in determining the pace of the tightening process.

[Yousuf Ali]

The US government report released on Friday showed the US economy shrank 0.7% quarter on quarter, compared to the preliminary estimate of a 0.2% expansion. The markets were expecting the second estimate to show a contraction of 0.9%.

The economy contracted on the back of a small inventory buildup and weaker net exports than previously reported. The consumer spending remained little changed at 1.8%, while the inventories increase USD 95 billion instead of USD 110.3 billion.
Meanwhile the imports were revised higher to 5.65 from 1.8%, while the exports fell 7.6% leading to a larger trade deficit, which dragged GDP lower.

Core personal consumption expenditure (pce), an inflation gauge tracked by the Fed, was revised lower to 0.8% quarter on quarter from the initial estimate of 0.9%.

[Yousuf Ali]

The Federal Reserve may increase its key policy rate by as much as 2% by the end of next year, with gradual hikes possible during every other meeting once the cycle begins.

The Fed funds rate will probably be more like 1.75% to 2% by 2016 end.

If we get 2% that would be accommodative by normal measures, to get there the Fed could hike rates every other meeting perhaps.

The lift-off will begin in September though with less conviction after the latest Fed developments. If it looks like the second quarter economy is going to be pretty decent, Then September can be right back as a frontrunner.