The US Dollar has firmed for a second consecutive day against the Pound, ending the UK currency’s rally which sent it to a two-year high during yesterday’s session.
A combination of light trading, a rise in commodity prices and a knock to market sentiment as a result of disappointing data out of China has seen the market swing widely. The relatively light level of trade has also caused bigger than usual swings due to the lack of liquidity being traded.
Despite the release of positive construction and house price data the Pound is on course to make its largest weekly decline in over two months. Sterling was weakened after some economists highlighted that the house price increases cannot be sustainable and suggested that the Bank of England may have to take action to cool down the UK housing market.
The Dollar meanwhile continued to find support from Thursday’s strong US jobless claims report which showed that the number of US citizens claiming unemployment benefits fell by 2,000 in the week ending December 28th.
The US Dollar also firmed against the Euro despite the release of data which showed that the number of people out of work in Spain fell by 107,600 in December, confounding market expectations for the number of Spaniards out of work to rise by 20,000.
Against the Japanese Yen the Dollar softened as investors shunned risky assets and took the opportunity to embark on a bout of profit taking. As a result the Yen edged away from a five year low against the ‘Greenback’.
The Dollar could see some movement later Friday evening as Federal Reserve Governor Ben Bernanke is due to speak on the state of the US economy in Baltimore at 19:00 pm GMT. Investors will be hoping to see if the governor will offer any hint as to whether the Fed will make any further cuts to its monetary easing programme.
Next week will see the forex market return to normal as traders and investors return to work following the Christmas and New Year holiday season. The next major piece of data due for the US Dollar is next Monday’s ISM non-manufacturing PMI report.
US Dollar (USD) Current Exchange Rates
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6094
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7347
The US Dollar/ Canadian Dollar Exchange Rate is currently in the region of: 1.0620
The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6413
The Euro/ US Dollar Exchange Rate is currently in the region of: 1.3610
(Correct as of 15:00 pm GMT)
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