• USD is mixed after trade balance figures
• EUR stabilizes after market digests Draghi’s comments
• AUD held ground after strong Chinese exports
USD – The dollar strengthened against the euro, but weakened against the sterling and yen after the release of U.S. trade balance figures. In a report released from the Bureau of Economic Analysis, the U.S. trade balance fell to a seasonally adjusted -38.5B, from -48.6B in the preceding month whose figure was revised up from -48.7B. Analysts had expected the U.S. trade balance to rise to -46.0B last month. The data suggest that the government may see an upward revision in the advanced reading of fourth-quarter gross domestic product, which showed that the economy contracted at a 0.1 percent due to a decline in inflation-adjusted exports. The market will look towards data releasing next week with import and export prices due out, as well as, retail sales and business inventory figures.
EUR – The euro weakened against the dollar touching $1.3370 and fell as low as 123.40 yen, before stabilizing and giving back some of its losses. The move came after the European Central Bank (ECB) left rates on hold at 0.75 percent yesterday as expected. The ECB went on to say that they will monitor the impact of the strengthening euro, but reiterated that it was not a policy target. Draghi also stated that economic activity in the euro area should recover gradually this year, but added there are more negative risks than positive risks.
GBP – Sterling pushed higher against the dollar moving above a six-month low. The pound strengthened against the euro on Friday as traders booked profits and on bank reports stating that the sterling was a good buy at current levels after European Central Bank chief Mario Draghi expressed some concerns on Thursday about the single currency's rise, although overall remained fairly positive.
JPY – The yen gained strength vs. the dollar after a comment made by Japan’s Finance Minister Aso that yen weakness from 78 to 90 in recent months was steeper than intended. Also helping was Prime Minister Abe’s continued effort to accomplish 3 key economic policies: monetary easing, fiscal spending and reforms to create competitiveness. Abe plans on appointing a new bolder BoJ chief with current Governor Shirakawa stepping down on March 19th. The Japanese yen is currently trading at 92.76 to the US dollar, up 1% from Thursday’s close.
Commodity Currencies – The AUD strengthened against the USD after better than expected Chinese trade data, helping offset sharp losses during the week. China showed a solid rise in imports, posting a 13% gain in January. The Aussie dipped as far as $1.0256 after the RBA trimmed its growth and inflation forecasts, leaving the door open for further rate cuts should the economy continue to disappoint. Weak economic data may hold the AUD in lower ranges over this weekend. The Canadian dollar slid to its lowest level in more than a week after data showed Canada unexpectedly lost jobs in January and housing starts were much lower than forecast, reducing bets on an interest rate hike this year.