The bullishness of the US dollar is unstoppable even though the most recent US economic data was mainly below expectations. Last Friday, the US PPI decreased by 0.6% against an expected 0.3% increase. The fall is the biggest one in six years. Also, the UoM Consumer Sentiment was at four-month low. The US dollar retreated against its major peers after the data release but rose again and finally closed at 100.50 – the first time closing beyond the 100 level in 12 years.
The euro dollar gained some support from 1.05, although the support may not stand for long and many participants now are expecting the currency pair to soon reach parity.
The British pound was the second worst performing major currency losing 2%. After the BOE’s Governor Carney said that the first interest rise may be delayed, the Sterling lost 300 pips moving down to a five-year low at 1.47 against. If we want to find the next support level or target, then we’ll need to look at its monthly chart. I guess the next will be the low of May 2010 at 1.4230. However, it is still 500 pips away, and the UK is still the second potential advanced economy to raise its interest rate. The target will not be reached in the short-run.
Along with the slump of US oil prices and a slightly downgraded unemployment rate at 6.8%, the Canadian dollar maintained its weakness. USD/CAD has now once again reached 1.28, the January high. The 1.30 integer level will be the next target.
Looking to the stock markets, Shanghai Composite surged by 0.7% to 3373. The Nikkei Stock Average climbed by 1.39% as well. Australian ASX 200 lost 0.62% to 5814. In European markets, the UK FTSE slid 0.3%, the German DAX gained 0.87% and the French CAC Index rose 0.46%. US stocks fell as USD kept its strength. The S&P 500 closed 0.61% lower at 2053. The Dow lost 0.82% to 17749, and the Nasdaq Composite Index slid 0.44% to 4872.
On the data front, Australia New Motor Vehicle Sales will be out at 11:30 am AEDST. US Empire State Manufacturing Index and Industrial Production will be released at midnight.
Have a great trading day!
Anthon