The dollar weakened against its peers today, extending losses to 8-month lows on thin volume traded, as the greenback continued to be pressured to the downside by the Federal Reserve’s vigilant approach to raising rates over the remainder of the year. China’s consumer price index dropped 0.4% in March, compounding forecasts for a 0.3% decrease, highlighting a loss in momentum in growth for the world’s second largest economy. The World Bank lowered its growth expectations for East Asia and the Pacific region due to forecasts of lackluster productivity in China over the next 3 years. The US dollar index was down 0.25%, trading at 93.98 off its 8-month low of 93.79 hit earlier.
The euro strengthened against the dollar with the pair up 0.06%, trading at 1.1409 off its session high of 1.1447 after having come off its session low of 1.1372 reached earlier in the day. Germany’s finance minister Wolfgang Schauble urged central banks to begin increasing interest rates, adding that “excessive liquidity has become more a cause than a solution to the problem”. The euro appears to be poised to retain its edge against the dollar until the latter half of the year, as policy divergence between the European Central Bank and the Federal Reserve continues to drive the currency.
The pound strengthened against the dollar with the pair up 0.79%, trading at 1.4235 off its session high of 1.4286 after having come off its session low of 1.4100 reached earlier in the day. The market eagerly awaits the UK consumer price index data release set for tomorrow, as investors try to gauge whether UK inflation is headed in a direction that could invite scrutiny at the Bank of England. Many believe that the pound is oversold at current levels, looking for some kind of pullback to balance the markets.
The yen strengthened against the dollar with the pair down 0.06%, trading at 108.04 off its session high of 108.44 after having come off 17-month lows of 107.63 reached earlier in the day. Japanese Chief Cabinet Secretary Yoshihide Suga commented that Japanese officials are paying close attention to the foreign exchange market, adding that recent moves in the yen were one-sided and speculative. Market consensus is that the Bank of Japan will wait until at least after this week’s G20 meetings in the US to intervene in order to weaken the yen. The dollar has remained lower against the yen amid speculation that the Federal Reserve will stay cautious in tackling rate increases this year as a result of global economic uncertainty.
The Australian, New Zealand and Canadian dollars strengthened against the greenback as commodity associated currencies were supported by a jump in oil prices. Crude oil was last up 1.21%, trading at $40.20 per barrel after Russia announced that its crude output would remain flat next year. Crude prices slid earlier in the session after experts cautioned that plans to freeze production would only have a limited effect on reducing global overproduction. The Aussie dollar added 0.66% against the greenback, with the pair trading at 0.7606 off its session high of 0.7629 after having come off its session low of 0.7527 reached earlier in the day. The kiwi dollar rose 0.87% against the greenback, with the pair trading at 0.6866 off its session high of 0.6878 after having come off its session low of 0.6790 reached earlier in the day. The loonie gained 0.62% against the dollar, with the pair trading at 1.2898 off its session low of 1.2890 after having come off its session high of 1.3015 reached earlier in the day.
Disclaimer: This information has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information.