U.S Dollar Rises on Data, Rising Yields, Risk Aversion
U.S Dollar Rises on Data, Rising Yields, Risk Aversion
The United States dollar index (DXY) rose to a one-year high of 94.38 on Wednesday, lifted by stronger US data, rising Treasury yield and a continued appetite for safe assets.
The US data schedule was light on Wednesday, with a sharp increase in August pending home sales and a surprise increase in weekly oil stocks the key readings.
Thursday’s schedule will be busier, with the third estimate of second-quarter GDP, the September reading from ISM-Chicago and weekly initial jobless claims. In addition, Federal Reserve Chair Jerome Powell testifies before the House Financial Services Committee.
A quick summary of foreign exchange action on Wednesday shows that EUR-USD fell to 1.1603 lows from 1.1690 at the start of the day, with a widening of interest rate differentials and a relatively strong economic outlook lifting the dollar.
The outlook remains to the downside for the pair.
GBP-USD slipped to a nine-month low of 1.3412, with the pound extending its Tuesday declines as Bank of England officials suggest that the recovery may be more difficult in the UK than previously expected. As with the euro, the bias remains to the downside for the pair due to dollar strength.
USD-JPY continues to rally on dollar strength and the yield differential between the US and the 0% controlled yield in Japan.
USD-CAD rose to 1.2774 from 1.2667 overnight as lower oil prices trimmed the Canadian dollar. In addition, softer-than-expected Canadian inflation data was negative for the currency.
The outlook is for the pair to remain in a tight range as both the US and Canada are expected to outperform other major economies.
