Major Currency Pairs: Pound Dropped To Three Week Low

EUR/USD
The euro fell to fresh session lows against the broadly stronger dollar on Wednesday, after upbeat U.S. economic data added to indications that the recovery would continue to gain momentum. The dollar strengthened across the board after data showed that manufacturing activity in the Empire State expanded at the fastest pace since May 2012 this month. The Federal Reserve Bank of New York said that its general business conditions index jumped to 12.51 in January from an upwardly revised 2.22 in December. Analysts had expected the index to rise to 3.75. A separate report showed that U.S. producer price inflation rose at the strongest rate in six months in December. The common currency shrugged off a report showing that the euro zone’s trade surplus widened to EUR16.0 billion in November from a surplus of EUR14.3 billion in October, due to a decline in imports. Analysts had expected the trade surplus to widen to EUR16.7 billion. Elsewhere, Germany’s Federal Statistics Office said Wednesday the economy expanded by just 0.4% in 2013 after increasing by 0.7% in 2012, as the crisis in the euro zone acted as a drag on growth. Analysts had been expecting growth of 0.5%.
EUR/USD Hour Chart" title="EUR/USD Hour Chart" width="624" height="433">

GBP/USD
The pound dropped to a three-week low against the dollar after a U.S. central bank report showed a measure of manufacturing accelerated at the fastest pace in a year, luring investors away from Britain’s currency. Sterling extended this year’s decline versus the greenback as Bank of England Governor Mark Carney told lawmakers in London that the central bank wasn’t expecting a dramatic increase in interest rates. U.K. government bonds fell for a second day before the Debt Management Office auctions 2 billion pounds ($3.27 billion) of 30-year gilts tomorrow. “Timing wise the pound move against the dollar followed today’s U.S. data,” said Peter Frank, global head of currency strategy at Banco Bilbao Vizcaya Argentaria SA in London. “Cyclically the U.S. is well ahead of the U.K. For Carney it’s about targeting the supply side of the economy and rate setting is very much lower down on the order of priorities.”.
GBP/USD Hour Chart" title="GBP/USD Hour Chart" width="624" height="468">

USD/JPY
Japan’s core machinery orders rose more-than-expected last month, official data showed on Wednesday. Japan’s Core Machinery Orders 9.3% vs. 1.2% forecasting a report, Economic and Social Research Institute said that Japan’s Core Machinery Orders rose to 9.3%, from 0.6% in the preceding month. Analysts had expected Japan’s Core Machinery Orders to rise to 1.2% last month. Japan’s corporate goods price index fell more-than-expected last month, official data showed on Wednesday. Japan’s Corporate Goods Price Index 2.5% vs. 2.6% forecasting a report, Bank of Japan said that Japan’s Corporate Goods Price Index fell to a seasonally adjusted annual rate of 2.5%, from 2.7% in the preceding month. Analysts had expected Japan’s Corporate Goods Price Index to fall to 2.6% last month. Japan’s tertiary industry activity index rose less-than-expected last month, official data showed on Wednesday. Japan’s tertiary index 0.6% vs. 0.8% forecasting a report, METI said that Japanese tertiary industry activity index rose to a seasonally adjusted 0.6%, from -0.9% in the preceding month whose figure was revised down from -0.7%.
USD/JPY Hour Chart" title="USD/JPY Hour Chart" width="624" height="468">

USD/CAD
The Canadian dollar reached a four-year low for a second day on speculation the nation’s central bank may signal at a meeting next week the need for lower interest rates amid faltering economic growth. The currency erased losses as crude oil, Canada’s biggest export, climbed amid a drop in U.S. inventories. The loonie, as the currency is called, has fallen this month against 15 of 16 major peers as interest-rate expectations between the U.S. and Canada diverged, with the Federal Reserve slowing monetary stimulus. Bank of Canada officials meet Jan. 22, when they will also release a quarterly report on their view of the economy. “People are starting to get the view the Bank of Canada is certainly not going to be raising rates, but might actually turn more dovish or even open the door to rate cuts,” said David Watt, chief economist at the Canadian unit of HSBC Holdings Plc, by phone from Toronto. “You’re getting to the sell-Canada kind of story.”
USD/CAD Hour Chart" title="USD/CAD Hour Chart" width="624" height="468">