The US dollar rebounded on Wednesday to climb back towards Monday’s 8½-month highs after taking a pause yesterday from its recent gains. Weaker-than-expected ISM manufacturing data on Tuesday also weighed on the greenback. Speaking yesterday in Michigan, Chicago Fed President Charles Evans reiterated the need for a gradual path of interest rate increases adding that “it could well be appropriate for the funds rate to still be under 1 percent at the end of 2016.”
The greenback moved higher against the yen in today’s Asian session to climb just above 123 yen. The euro gave up some of yesterday’s gains when strong PMI and unemployment data added some support to the single currency. It was down at 1.0613 dollar in late Asian session. Sterling was flat at 1.5067 dollars.
The Australian dollar briefly spiked up on strong GDP data, but was slightly weaker in late Asian trading as it took a breather from yesterday’s sharp rally after the RBA kept rates on hold. Australian GDP expanded by 0.9% quarter-on-quarter in the third quarter of the year, beating expectations of 0.8% growth. The Aussie jumped to 0.7341 against the US dollar before easing to 0.7316.
The New Zealand dollar was also stronger following an increase in global dairy prices on Tuesday. The kiwi peaked at 0.6687 dollars on Tuesday, but had eased to 0.6662 in late Asian session today.
However, it was a different story for the Canadian dollar, which took a knock from poor GDP readings as well from ongoing weakness in crude oil prices. Canadian GDP contracted in September, undermining the overall positive growth for the entire third quarter. The US dollar jumped to 1.3395 against the loonie after yesterday’s data and had eased to 1.3370 in late Asian session on Wednesday.
US oil futures headed for a fifth day of declines on rising US stockpiles and increased doubts on whether this week’s OPEC meeting would result in cuts to production. Oil prices were down at $41.50 in late Asian trading.
Coming up later today, flash Eurozone inflation data, US ADP employment change numbers and the Bank of Canada’s December policy meeting will all be closely eyed. However, Fed Chair Janet Yellen could attract the most attention as she is expected to deliver two speeches, the second of which will be on the US economic outlook.