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The US Dollar firmed against most major currencies on Thursday after a key Federal Reserve official warned that rate hikes may come sooner than markets have been expecting. That plus solid U.S. jobless claims numbers supported the US Dollar as well.
The U.S. Labor Department reported earlier that the number of individuals filing for initial jobless benefits in the week ending Sept. 20 rose by 12,000 to 293,000, up from the previous week's revised total of 281,000.Analysts had expected jobless claims to rise by 19,000 to 300,000 last week, and the better-than-expected number rose demand for the Dollar.
Separately, U.S. durable goods orders dropped by 18.2% in August, after an increase of 22.5% in July, whose figure was revised down from a previously estimated gain of 22.6%.Analysts had expected durable goods orders to decline by 18.0% last month, and the figure was close enough to expectations to give the US Dollar room to firm.
Core durable goods orders, which are stripped of volatile transportation items, rose 0.7% last month, in line with expectations, after falling 0.5% in July, whose figure was revised from a previously estimated 0.7% drop.
The US Dollar saw added support after Dallas Federal Reserve President Richard Fisher said the U.S. central bank may start raising benchmark interest rates around the spring of 2015, earlier than many market expectations.While the Fed has suggested its bond-buying program could close in October, uncertainty as to when rate hikes may begin in 2015 have concerned traders.
Meanwhile, EUR-USD came under pressure after European Central Bank President Mario Draghi reiterated on Thursday the central bank's commitment to act with more policy measures to boost inflation in the Euro zone."We stand ready to use additional unconventional instruments within our mandate, and alter the size or composition of our unconventional interventions should it become necessary to further address risks of a too prolonged period of low inflation," Draghi said.
A day earlier, Mario Draghi had already vowed to keep monetary policy "accommodative" for as long as needed, and to use every tool at the ECB's disposal to fight deflation. EUR-USD fell to as low as 1.26964 before recovering to close down 30 pips at 1.27499 in New York.
USD-JPY was down 0.36% at 108.746 after touching an intraday high at 109.363.GBP-USD too was down at 1.63150, down some 24 pips.
Bank of England Governor Mark Carney said earlier the time at which rate hikes kick in is "getting closer" but stressed a decision to tighten policy will depend on data and added the BOE does not have a pre-set course, words that cushioned the British Pound's losses against a firming US Dollar.
The New Zealand Dollar hit a one-year low after Reserve Bank of New Zealand Governor Graeme Wheeler ramped up his recent warnings about the level of the Kiwi.
"The Bank's analysis indicates that the real exchange rate is well above its sustainable level, and also above levels justified by short-term business cycle factors," Graeme Wheeler said in a statement that caught markets off-guard.
It also inflicted collateral damage on AUD-USD, which fell to 0.87901,its lowest since early February.
Reserve Bank of Australia Governor Glenn Stevens made remarks on risk taking at a speech on Thursday and suggested that the Australian economy needed more push.
In the meanwhile, the Japanese Yen shrugged off remarks from Prime MinisterShinzo Abe.Japanese PM Abe reportedly said that the weaker Japanese Yen had both positive and negative impacts and that he wanted to carefully watch the impact of Yen weakness on regional economies and on small and mid-sized companies.
On Wednesday, Japanese Prime Minister Shinzo Abe voiced concerns over the economic impact of recent weakness in the Japanese Yen.
The US Dollar was up against the Canadian Australian and New Zealand Dollars, with USD-CAD up 50 pips at 1.1071, AUD-USD down 97 pips at 0.87864 and NZD-USD down 156 pips at 0.79187.
Global stock markets plunged on news Russia may consider a proposal allowing Moscow to seize foreign assets, which spooked investors across the globe.
A draft law, a response to Western sanctions slapped on the country for its alleged meddling in the Ukraine conflict, was sent to the Russian parliament Wednesday.
U.S. stocks ended with sharp losses on Thursday, with the S&P 500 suffering its biggest one-day decline since July, as Apple shares tumbled and the US Dollar rose to a four-year high.
The day's decline was broad base, with all ten primary S&P 500 sectors lower on the day and most down more than 1 percent. About 80 percent of stocks traded on both the New York Stock Exchange and NASDAQ ended lower with Apple leading the fall on concerns its new iPhone 6 and iPhone 6 Plus may be prone to glitches, including bending hardware and problematic software upgrades, which sent the tech bellwether falling and brought broader indices down with it.
The losses were compounded by the continued strength of the US Dollar which rose 0.2 percent against a basket of major currencies. It is up 6.8 percent for the quarter, its biggest quarterly increase in six years.
Today, markets will move on U.S. gross domestic product and consumer-sentiment data as well as a report on German consumer climate.
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Forex Outlook 26.09.14
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26-Sep 2014 Friday
11:41 AM (3502 days ago)
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