US Dollar Index – (+0.1%)
- Financial markets remained quite sullen on Monday, with a quiet economic calendar providing very little impetus. The US Dollar index managed to recover some of the ground lost from the post-NFP move on Friday, but this still didn’t contribute to any notable price action.
- USD/JPY was the most active performing cross on the day, dropping below 104.00 in Asian trading hours, a move that continued towards 103.00 throughout the day, making for a 0.8% strengthening of the yen against the greenback. Despite Japan being on a holiday (Coming of Age Day), residual selling of the cross from Friday was extended into this week’s open. Having not reacted initially from the poor non-farm payrolls, the move was cited almost a delayed response.
- Another solid performer on Monday was the AUD, with the AUD/USD cross rallying to back above 0.9000 to 0.9065. This too was seen as follow through from the lacklustre NFP report, but also supported by decent home loans data during the morning session, up an impressive 1.1% from the month previously.
- The worst performer on the day within the majors was the GBP, dropping about 0.75 to the USD. The sterling has come under pressure so far this year, with disappointing economic data raising questions over whether the UK economic recovery is as prosperous as many had been led to believe. Housing, consumer, services, manufacturing and industrial data have all shown a slight drop off from what was exceptional performance towards the end of the year and this has raised an eyebrow or two. Any losses from these data sets were reversed after the jobs data on Friday, so the move lower in cable on Monday should probably just indicate a natural adjustment.
- The only news item from Europe on Monday was Italian economic data, showing industrial production expanding 0.3% in December from the month prior. Doubts still persist however over the Italian economy, with unemployment in that country still moving in the wrong direction, constantly breaking record levels.
- Off to Tuesday and possibly a more active session in store. Whilst Europe and the UK report their latest inflation data, the US is scheduled to release retails figures.