Dollar heads for weekly gain following strong midweek performance

The U.S. dollar registered some modest gains Thursday, but all major rivals remained relatively rangebound ahead of the long spring-holiday weekend that has a lot of financial markets closed on Friday.

What are currencies doing?

The ICE U.S. Dollar Index
DXY, +0.03%
gave up earlier gains at the start of U.S. trading hours, was little changed at 90.059. On Wednesday, the dollar index had rallied to a five-day high. The index is headed for a 0.7% gain on the week, reversing into positive territory after its first loss in four weeks last week.

The WSJ U.S. Dollar Index
BUXX, -0.01%
a broader gauge of the U.S. currency, slipped 0.2% to 83.81.

The Japanese yen
USDJPY, +0.05%
regained strength Thursday, after suffering its biggest one-day decline against the greenback since January 2017 on Wednesday. One dollar last bought 楼106.44, down from 楼106.88 late Thursday in New York.

Read: Investors need to brace for 楼100, currency strategist says

The euro
EURUSD, +0.0163%
was more or less unchanged at $1.2305, while the British pound
GBPUSD, +0.0927%
was also slightly weaker at $1.4030 versus $1.4079.

What is driving the market?

The U.S. dollar was rangebound versus its main rival, the euro, on Wednesday, with bigger moves in the Japanese yen and the British pound.

Japans currency strengthened and recovered somewhat from Wednesdays trading when the buck hit its best daily gains against the yen.

The dollar retraced its modest losses following economic data and turned positive, as market participants expect a dollar-positive bias in the market as the buck tends to benefit from month-end and quarter-end rebalancing flows. With the long Easter and Passover weekend ahead, trading flows are also expected to thin out beginning Thursday.

Read: Which markets are closed on Good Friday?

The U.K. reached its one-year countdown before the country leaves the European Union, leading investors and analysts to take stock. Thursdays data dump shed some unfavorable light on this timeline, as fourth-quarter payments data showed a shrinking account deficit but widening trade deficit, and the final reading of last years GDP reiterated that the U.K.s economic expansion has been slowing versus previous years. All this left the pound subdued.

Check out: One year to Brexit and the British pound is looking good

Also read: Leave backer with a year to go to Brexit: I am never going to vote again

What are strategists saying?

In the short run, the U.K.s balance of payments data mean very little for [its] currency, wrote Stephen Gallo, European head of FX strategy at BMO. However, on a medium-term basis, the trend in the data confirms that the pound is still cheap by historical standards and paves the way for more incremental gains in the currency.

The dollar-yen pair is trading lower after investors reduced their bets before the Easter break, said Viash Sreemuntoo, corporate trader at HiFX. The yen strengthened despite improving relations between the two Koreas [which are expected to meet on April 27].

What else was in focus?

Initial jobless claims for the week ended March 24 came in at 215,000, beating estimates of 230,000 and matching the lowest level since 1973.

Personal income grew 0.4% in February, while consumer spending increased 0.2%. The PCE inflation index climbed 0.2% in February, with core inflation also up 0.2%, in line with expectations.

The Chicago PMI for March read 57.4, down from 61.9 before, while March consumer sentiment slipped to 101.4, versus a 102 consensus estimate.

Related Topics Currency Euro Yen Pound U.S. Dollar Federal Reserve

Quote References DXY +0.02 +0.03% BUXX -0.01 -0.01% USDJPY +0.06 +0.05% EURUSD +0.0002 +0.0163% GBPUSD +0.0013 +0.0927%

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