The US dollar (USD) continued to underperform as investors sent it lower against all other major currencies. Upbeat US data and a positive speech from the Federal Reserve failed to inspire it higher.
US unemployment came in largely as expected at 244K, same as the month on month Housing Price Index which printed 0.4%. The latest Crude Oil Inventories also showed a build of 0.6M barrels. Fed Member Lockhart and Treasury Secretary Mnuchin both delivered dollar-supportive comments yesterday, but all that failed to inspire positive price action on the greenback. The problem seems to be on yields, which continued to edge lower and raised investor concerns. US yield rates are expected to continue providing the cue for the USD, but today, traders will watch out for the release of New Home Sales data as well as Consumer sentiment figures.
Meanwhile, the euro (EUR) took full advantage of the weak USD to post gains despite soft data from the Eurozone. Quarter on quarter German Final GDP came in as expected at 0.4%, while month on month Italian Retail Sales printed -0.5%, worse than the expected 0.2%. There were also no political headlines yesterday, but with the political situation across the Eurozone still tense, the common currency is not expected to post any significant or extended gains.
In other currency news, the British pound (GBP) was the best performer of the day despite a complicated UK fundamental environment. UK CBI Realized Sales printed 9, better than the expected 5, but the biggest news yesterday was Scotland. There was discussion of Scottish independence, with a proposed referendum as soon as next year. If these discussions are actively picked up by politicians, the Queen’s currency will certainly be more pressured in the coming days. Today, GBP traders will focus on the release of BBA Mortgage Approvals, where a slightly negative number is expected.
All commodity currencies printed gains against the weak USD. A slow build in US crude oil stockpiles supported the Canadian dollar (CAD), while improving gold and iron ore prices inspired the Australian dollar (AUD). The New Zealand dollar (NZD) benefitted from USD weakness. There will be no major data from both New Zealand and Australia today, but Canada will be releasing Consumer Price Index data, and if upbeat numbers are released, all commodity currencies will extend their gains.