Currency Pair Overview Dollar Mixed After Volatile Day
Overall: A heavy day of economic releases saw the majors trade in wide ranges influenced by equity and commodity markets as well as regional movements in response to the release numbers. The majors entered the U.S. session trading sideways after moving during the Asian session and reversing during the European trading hour. This happened despite Asian and European equity markets moving in the same direction, higher, overnight. U.S. futures moved higher on earnings news this morning and U.S. markets traded higher throughout the day adding to the volatility in currency markets.
The Euro (Eur/Usd) Despite moving in a 90 pip range overnight, the euro had a hard time establishing solid momentum. At the London open, the pair struggled to break above the previous days high and shortly after changed direction and headed lower. The euro continued to fall through the remainder of the day as better than expected U.S. trade balance figures strengthened the greenback. German CPI fell by 0.1% in March, in line with expectations and the preliminary release. On the day, the pair lost 120 pips, closing at the low of the day.
The Pound (Gbp/Usd) The pound moved higher during the Asian session, but traders positioning themselves ahead of the Bank of England interest rate decision saw the pair endure big swings during the European session ahead of the decision. As expected, the BoE kept rates on hold at 0.50% and the pair responded by moving lower, initially, before rebounding. The pair traded in a wide 145 pip range during the U.S. session as traders weighed the BoE’s decision against strong U.S. economic news. On the day, the pair lost approximately 50 pips.
The Aussie (Aud/Usd) Movement in the aussie was rather volatile during the Asian session after the unemployment rate in Australia jumped more than analysts had expected. The unemployment rate increased by 0.5% to 5.7% in February. Analysts had expected a read of 5.4%. The number of unemployed persons increased by 28.5K to 460,400. As the Asian progressed the pair moved higher in response to higher Asian equity markets and that trend continued as European markets gained followed by higher U.S. markets. Risk tolerance was firmly entrenched in the markets on Thursday and the Australian dollar benefitted greatly. On the day, the pair gained approximately 90 pips, testing 0.7200 at the close.
The Cad (Usd/Cad) The cad saw limited movement during the Asian session, which is not unusual, but declined into the London open. The declines intensified at the U.S. open after Canadian employment data showed that the unemployment rate came in as expected at 8.0% and trade balance figures showed a trade surplus of 0.1B rather than a deficit of 1.3B as expected. The Canadian dollar was also helped by global equity markets closing higher as we head into the holiday weekend and oil prices gaining $2.70 a barrel. On the day, the pair lost 115 pips.
The Swissy (Usd/Chf) The swissy struggled to move higher during the Asian session, but the London open put a stop to that and the pair weakened and moved 70 pips lower. As the session progressed, the pair stabilized and moved higher as the dollar strengthened. The higher moves continued through the U.S. session and the pair closed the day higher by approximately 100 pips. The Swiss unemployment rate held steady at 3.3% in March as expected.
The Yen (Usd/Yen) We saw a turnaround in the yen from the past two days as equity markets strengthened globally and traders moved away from the low yielding Japanese currency as their appetite for risk increased. The U.S. session saw the pair continue to appreciate as U.S. equity markets strengthened throughout the day. Japanese core machinery orders posted an unexpected gain, coming in at 1.4%, much higher than the predicted 6.8% loss. On the day, the pair gained approximately 70 pips.