(MENAFN– ecpulse)
The dollar traded lower Tuesday, extending losses into fourth session as investors continued to mull the likely timing of the U.S. Federal Reserve`s trimming of its asset-purchase program following last Friday`s strong U.S. jobs report.
The dollar weakened against the Japanese yen, euro and British pound as stronger risk appetite dampened safe-haven demand for the dollar and supported the euro.
The greenback traded cautiously after a string of speeches by three Federal Reserve presidents suggested the central bank could start scaling back its $85-billion-a-month stimulus program as early as this month.
Dallas Fed President Richard Fisher said Monday that financial markets are seen in better conditions, cementing the case of an early reduction in stimulus. James Bullard, the St. Louis Fed president said the Fed could start reducing its monthly bond purchases this month in reaction to signs of an improved labor market.
The dollar index stood at 80.10, after opening at 80.17. The USDIX index so far recorded an intraday high of 80.17 and a session low of 80.01.
No major U.S. economic reports are scheduled for release in the front of the week and the momentum in market is bounded by the unpredictability of Fed policy. The next Federal Reserve policy meeting is less than 10 days away.
Elsewhere, the dollar was trading lower against the Japanese yen, falling off a six-week high with USDJPY pair inching down to 103.174 after hitting a session high of 103.836.
Euro Scales Up
The euro rose to fresh six-week highs against the dollar and fresh five-year high against the yen earlier in the session as risk appetite continued to be underpinned after the latest U.S. stronger-than-expected jobs report.
The common currency received a significant boost as French manufacturing output increased by 0.4 percent in October while industrial production contracted by 0.3 percent, the same as the month before.
Investors will be closely watching the European Central Bank President Mario Draghi speech in Rome today.
The EURUSD pair rose to highs of $1.37656, the strongest level since October 30 and was last seen at $1.37480. The pair was likely to find support at 1.3745 and resistance at 1.3800.
Euro was also trading up against the yen with the EURJPY pair trading at ¥171.880 after opening at ¥141.846.
Pound Resumes Rally After UK Data
Pound continued its rally against the dollar for the third consecutive session, climbing to the strongest level in more than two years after a report released during the session showed UK’s annual industrial production expanded and the trade deficit narrowed in October.
Britain’s currency rose sharply in the previous session after the Bank of England (BoE) Governor Mark Carney said in a speech in New York that latest UK economic news has been positive.
The GBPUSD pair hit a session high at 1.64645, after which the pair fell to consolidated at 1.64365, from an opening of 1.64253.
Aussie Falls Vs. Dollar After China Data
The Australian dollars trimmed recent gains against their U.S. counterpart in Europe Tuesday following Chinese data that offered a mixed view of economic activity in the world’s second largest economy and Australia’s biggest export market.
Annual Chinese retail sales in climbed 13.7 percent in November, and industrial output for November rose 10 percent from the year ago period, slower than October’s increase of 10.3 percent.
The Aussie was flat at $0.91067, from $0.91070 in early trade, but was still well off a three-month low of $0.899980 plumbed last week.
The New Zealand dollar was little changed against dollar as investors wait for the Reserve Bank of New Zealand’s final rates review on Thursday, at which it is expected to leave the cash rate at its record low 2.5 per cent, with most market participants anticipating the first rise will be in March.
The NZDUSD is trading around 0.82854, up from an opening of 0.82790.
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