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EUR/USD Advances Above $1.20, Pressures Dollar to Lows

Published 01/11/2018, 01:26 PM
Updated 01/11/2018, 01:26 PM

Investing.com – The dollar fell sharply against a basket of major currencies amid a duo of weaker-than-estimated economic reports while a sharp uptick in euro added to downside momentum.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.51% to 91.63.

The Labor Department said Thursday its producer price index for final demand fell 0.1% last month after rising 0.2% in November. In the 12 months through November, the PPI rose 2.6, missing expectation for a 3% rise.

The softer wholesale inflation data renewed inflation jitters, easing investor optimism for a more aggressive Federal Reserve stance on monetary policy as investors awaited a consumer inflation report due Friday.

RBC said the softer PPI data signalled “downside risk” to the consumer prices index (CPI) data slated for Friday, noting that the finished consumer goods component fell 0.4% after an impressive 1.7% gain in November.

In a separate report, The U.S. Department of Labor reported Thursday that initial jobless claims increased 11,000 to a seasonally adjusted 261,000 for the week ended Jan. 5, missing forecasts of a 4,000 decrease.

Amherst noted that jobless claims reached their highest since September but remained confident that initial claims should return to “normal” as seasonally volatility is expected to disappear in the coming weeks.

The dollar had started the session on the front foot after reversing some of Wednesday’s losses as China rejected a media report suggesting it plans to slow or halt US Treasury bonds purchases, saying it is either “fake news” or based on incorrect sources.

Also weighing on the dollar was a sharp move higher in the euro above $1.20, following the release of hawkish European Central Bank (ECB) minutes.

The European Central Bank could consider a gradual shift in guidance from early 2018, the minutes of the ECB December meeting showed, as policymakers saw ‘some comfort' in wage dynamics despite ongoing concerns over subdued inflation.

USD/JPY fell 0.22% to Y111.19, while USD/CAD fell 0.16% to C$ 1.2530 as North American Free Trade Agreement (NAFTA) jitters continued to weigh on the loonie.

GBP/USD rose 0.22% to $1.3537 as traders await next Tuesday's release of UK consumer price index (SPI) data for direction.

Latest comments

If we break the historical equilibriums of International Trade and in some unconventional way we come to alter the value of currencies or monetary balances ... in the short term we wicked ... in the medium term it would be the disastrous germ of a new and more virulent crisis. .... historica .. this time really yes si
taking into account the different stages of evolution of the major economies and the delay in the recovery cycle of all of them, especially in the US, with respect to the USA it is difficult to understand the downward trend of the $, item plus the specific stimuli in the USA. as the TAX reform, higher real interests..etc. So we should ask ourselves is the market really an open market or in a certain way subject to certain political design? Who knows ? explain it, please
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