The US Dollar Asks, To Be A Hawk Or A Dove, That Is The Question Dear Janet Yellen?
The US dollar retreated against most of its forex counterparts when Fed Chairperson Janet Yellen refrained from talking about the central bank’s next monetary policy steps.
Other Fed officials also appeared to have mixed views about tightening, with FOMC member Evans saying that he’d like to see more signs of rising inflation before increasing interest rates. For Fed official Dudley, it’s possible that the liftoff conditions will be satisfied soon.
USDJPY dipped to the 122.60 area, EURUSD rallied up to the 1.0800 handle, GBPUSD climbed to a high of 1.5234, and USDCHF dipped briefly below the 1.0000 major psychological level.
Euro brushes off ECB dovishness, bleak data
The euro seems to have gotten enough of dovish remarks from the European Central bank, as the shared currency actually advanced against its counterparts after Governor Draghi’s testimony. The central bank head spoke of their readiness to act but didn’t clarify which monetary policy tools they would make use of.
EURJPY popped up to a high of 132.75 before retreating to 132.50, EURGBP is up to the .7100 major psychological level, EURAUD spiked close to 1.5200 at 1.5194, and EURNZD is trading at 1.6519. Economic data was weaker than expected as usual, with the industrial production report showing a 0.3% decline versus the projected 0.1% drop.
Commodity currencies supported by upbeat AU jobs
The Australian dollar got a strong boost from the October jobs report released during the Asian trading session, as underlying data also confirmed strengthening labor conditions. The economy added 58.6K positions during the month, enough to bring the jobless rate down from 6.2% to 5.9% even with an increase in the labor force participation rate.
Although this eased speculations of further rate cuts from the Reserve Bank of Australia, most market analysts took the numbers with a grain of salt due to adjustments in the seasonality factors incorporated by the Australian Bureau of Statistics. Traders appear to be wary of any potential revisions in upcoming releases, which explains why the Aussie quickly faded its post-jobs rally.
AUDUSD is still up around the .7125 level, NZDUSD continued to advance above .6500 to .6543, and USDCAD dipped below the 1.3300 handle to a low of 1.3274.
Japanese medium-tier data are lined up for today, with the revised industrial production figure and the tertiary industry activity index lined up. Analysts aren’t expecting to see any changes in the 1.0% increase in industrial production while the tertiary industry activity index might show a 0.2% uptick.