Dollar rally pauses as focus shifts to US data dump

The US Dollar (USD) stays in a consolidation phase early Thursday’s after having outperformed its major rivals on Wednesday. The market mood remains mixed in the early European session as investors await mid-tier data releases from the US that include weekly Initial Jobless Claims, January Housing Starts and Producer Price Index. Market participants will also pay close attention to comments from central bank officials.

On Wednesday, the US Census Bureau reported that Retail Sales in January rose by 3% following December’s 1.1% contraction. This print beat the market expectation for an increase of 1.8% and helped the US Dollar preserve its strength in the second half of the day. Later in the American session, however, Wall Street’s main indexes managed to gain traction and didn’t allow the US Dollar Index to extend its rebound. US stock index futures trade virtually unchanged in the European morning on Thursday.

Meanwhile, the benchmark 10-year US Treasury bond yield built on Tuesday’s gains and rose more than 1% on Wednesday. After having peaked above 3.8% during the Asian trading hours, the 10-year yield started to edge lower and was last seen losing 0.6% at 3.78%.

In the Asian session on Thursday, Australian Bureau of Statistics reported that the Unemployment Rate climbed to 3.7% in January from 3.5% in December. Employment Change in the same period arrived at -11.5K, compared to the market expectation of +20K, and weighed on the Aussie. After having dropped below 0.6870, however, AUD/USD staged a rebound and was last seen trading modestly higher on the day at 0.6915.

USD/JPY closed the third straight in positive territory on Wednesday and touched its highest level since early January at 134.35. The pair stays relatively quiet early Thursday and trades at around 134.00. A Japanese lawmaker said on Thursday that the country’s Parliament Lower House will hold a confirmation hearing on the government nominees for the Bank of Japan (BoJ) governor and deputies on February 24.

While testifying before European Parliament on Wednesday, European Central Bank President Christine Lagarde reiterated that they intend to raise key rates by 50 basis points (bps) at the March policy meeting. EUR/USD ignored this comment and ended the day with a 50 pip loss. Early Thursday, the pair holds steady at around 1.0700.

GBP/USD suffered heavy losses following the soft UK inflation data on Wednesday but managed to hold above the key 1.2000 level. The pair consolidates its losses slightly below 1.2050 in the European morning.

Gold price fell to its lowest level in over a month at $1,830 on Wednesday pressured by rising US T-bond yields. XAU/USD struggles to gather momentum early Thursday and trades in a narrow channel below $1,840.

Bitcoin surged higher and gained nearly 10% on Wednesday, touching its highest level since August near $25,000. Although BTC/USD retreated modestly early Thursday, it clings to modest daily gains at around $24,500. Similarly, Ethereum rose 8% on Wednesday before stabilizing near $1,700 on Thursday.

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