After failing to achieve 95 Yen per Dollar the ‘Greenback’ could be caught in a downward correction and return to trading in the 86-88 Yen range within a few weeks.
The US Dollar Exchange Rate was trading in the region of 91.4000 against the Japanese Yen as of 14:40 pm GMT
As Federal Reserve Chairman Ben Bernanke prepares for a second congressional testimony after stressing yesterday that the benefits of asset buying outweigh the risks, the US economy was boosted by another better-than-forecast report.
Following on from yesterday’s impressive housing and consumer confidence figures, today’s US durable goods data also surpassed expectations by gaining by the most for twelve months.
The Commerce Department report revealed that bookings for equipment built to last for more than three years (excepting demand for volatile things like aircraft) jumped by 1.9 per cent in January – the biggest increase since the end of 2011.
Although total orders fell by 5.2 per cent (the first decline since August and 0.4 per cent more than predicted) orders excluding transportation equipment increased for the fifth month in a row while capital goods orders (excluding defence and aircraft) climbed by 6.3 per cent – also the most significant increase since December 2011.
As the slump in total orders can largely be attributed to defence bookings hitting a ten-year low, this report indicates that despite the trying economic times business investment is refusing to buckle.
As chief economist Mike Englund stated: ‘Globally, sentiment measures from the factory sector seem to have strengthened. In the US we will see continued growth in the equipment sector.’
Similarly, Gardner Denver Inc’s chief executive officer recently asserted: ‘While we’re not forecasting a strong upswing in growth this year, we do think we’re coming off the lows based on what we see in orders so far and what we hear from customers. We expect demand to remain stable in North America as the economy here appears to be modestly improving.’
In currency news, the Pound was able to climb slightly on the US Dollar despite data showing that 4Q UK GDP contracted as expected. Sterling gained a modest 0.2 per cent after dropping to a 2 ½ year low against the ‘Greenback’ earlier in the week.
Meanwhile, even with the ongoing political uncertainty in Italy the Euro was able to pare losses against the US Dollar following a better-than-forecast economic sentiment report for the 17-nation currency bloc and an Italian bond sale, gaining 0.4 per cent. However, as the tempestuous political situation in the Eurozone’s fourth largest economy is expected to adversely impact next month’s economic sentiment survey the Euro’s gains could prove short lived.
The Yen also managed to gain on the ‘Greenback’, rising against the majority of its most traded counterparts as industry experts consider what affect the Asian currency’s recent decline will have on the BOJ’s stimulus boosting plans. The Yen advanced by 0.3 per cent on the US Dollar and some analysts are now indicating that the American currency could experience a downward correction against its safe-haven rival. The ‘Greenback’ failed to hit the 95 Yen per Dollar level expected based on technical analysis. If this marks the beginning of a downward trend the ‘Greenback’ may ‘plunge into the cloud and slide toward a 86-88 range by the end of March’. This assessment, provided by Hiroyuki Tanaka, is based on study of the ichimoku chart. In the ichimoku chart the ‘cloud’ represents the area between the charts 1st and 2nd leading span lines. The cloud is used to demonstrate an area where orders may be clustered.
After dropping to its lowest level against the US Dollar since June, the Canadian Dollar experienced slight fluctuations prior to the conclusion of Bernanke’s congressional testimony. The ‘Loonie’ may experience gains in the hours ahead as a result of the better-than-expected US durable goods data.
The US Dollar posted notable gains against its South Pacific counterparts as the ‘Kiwi’ and ‘Aussie’ broadly softened as a result of disappointing home-grown data and global risk-sentiment reducing developments.
Several pieces of economic news may impact the US Dollar’s movement tomorrow, including employment and consumer confidence figures for Germany and US GDP Product Price Index, plus initial US jobless claims figures.
Current US Dollar Exchange Rates
The US Dollar to Euro (USD/EUR) exchange rate is trading at 0.7579
The US Dollar to Pound Sterling (USD/GBP) exchange rate is trading at 0.6596
The US Dollar to Canadian Dollar (USD/CAD) exchange rate is trading at 1.0268
The US Dollar to Australian Dollar (USD/AUD) exchange rate is trading at 0.9810
The US Dollar to New Zealand Dollar (USD/NZD) exchange rate is trading at 1.2143
The US Dollar to Japanese Yen (USD/JPY) exchange rate is trading at 91.4000
These exchange rates were correct as of 14:40 pm GMT
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