Aussie Dollar Sails While The Euro Sinks

Aussie Dollar Sails While The Euro Sinks
Aussie Dollar Sails While The Euro Sinks

The greenback dropped to a three-month low on Wednesday as mixed economic reports from the US suggested an uneven recovery in the world’s largest economy; which is currently undergoing a tapering situation mainly backed by proof that the economy has recovered. The ADP Non-Farm Employment Report showed slower growth in company job addition and this brought forward concerns regarding US economic growth. As traders took the time to look at the reports in perspective and realized that the harsh “polar vortex” freezing most of the United States and Canada could be the culprit as soon as the weather changed manufacturing and hiring would return to normal. Many businesses, schools, public events and activities were closed or cancelled in January as temperatures broker historical records.  

In today’s session, the Dollar Index is expected to strengthen as markets remain in a risk aversion mode ahead of the ECB decision and statement. The dollar US Dollar Index(15 minutes)20140206085536gained 6 points at the opening to trade at 81.21. While weak US economic data released yesterday will prevent sharp gains in the currency, losses too will be cushioned on account of weak market sentiments. US ADP Non-Farm Employment Change fell to 175,000 in January from 238,000 in December. ISM Non-Manufacturing PMI rose to 54-mark in January from 53 level in December.

The euro is trading at 1.3520 down 12 points in the Asian session. The euro gained marginally around 0.1 percent yesterday on the back of weakness in the dollar. However, the currency remained under pressure as lackluster retail sales data from the region led to downside pressure on the currency. The currency fell for five out of six straight trading sessions as overall market concerns along with weak economic data are acting as a negative factor.   Spanish Services PMI rose to 54.9-mark in January from 54.2 level in December. Eurozone Retail Sales plunged by 1.6 percent in December as against a gain of 1.4 percent in November.

aus nzdThis morning the Australian dollar is the star performer climbing 52 points to trade at 0.8963 after retail sales and trade balance numbers printed much better than expected. Australia’s trade balance returned to surplus in the final two months of 2013, helped by a strong rise in mining exports. Australia’s trade surplus was $468 million in December, following a surplus of $83 million in November. The November figure was revised from a deficit of $118 million. Most of the growth in GDP during 2014 is going to come from the exports sector. Retail trade rose 0.5 per cent in December, seasonally adjusted, and was up 0.9 per cent in the December quarter, Australian Bureau of Statistics figures show. Economists had forecast a rise of 0.5 per cent for December and 1.2 per cent for the quarter. The strength of the Aussie helped pull the kiwi along with it to trade at 0.8238.

The Japanese yen remains strong against the dollar and the euro as traders continue to hold to risk aversion. The JPY is trading at 101.55 against the dollar and against the euro at 137.31.





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