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USD more sensitive to weaker US economic data - BTMU

FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, notes that the USD was undermined yesterday by the batch of US economic data released yesterday which on the whole were weaker than expected.

Key Quotes

“The US dollar has remained weaker in the Asian trading session with EUR/USD having climbed back above the 1.2500-level and USD/JPY falling towards the 117.00 level.”

“It was revealed yesterday that initial jobless claims jumped by 21k to 313k reaching their highest level since early September. The were no specific factors cited as potential triggers for the spike higher although claims may have been negatively impacted by the recent bad weather.”

“The latest durable goods report also proved disappointing revealing that core orders contracted for the second consecutive month by -1.3% in November signalling a less favourable outlook for capital spending.”

“In addition, the latest personal spending, Chicago PMI survey, pending and new home sales reports, and University of Michigan consumer confidence survey all proved weaker than expected.”

“The one positive for the US dollar was that the core PCE deflator accelerated to 1.6% in October echoing the CPI report revealing that firmer core inflation is helping to dampen disinflation pressure from lower energy prices in the near-term.”

“More recently the US dollar has proved more sensitive to weaker than expected US economic data releases which is perhaps a reflection of the current bullish sentiment towards the US dollar and increasingly elevated long speculative US dollar positions. The US economy appears to be losing some momentum heading into year-end but is still holding up well.”

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