FOREX-Dollar holds firm after strong U.S. data, Chinese yuan extends run

Published 20/01/2020, 09:50
© Reuters.  FOREX-Dollar holds firm after strong U.S. data, Chinese yuan extends run

* Dollar, yuan boosted by economic prospects

* Traders prepare for BoJ, ECB meetings

* Sterling on the ropes again after Javid comments

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

LONDON, Jan 20 (Reuters) - The dollar held near a one-month

high against major currencies on Monday after last week's run of

data confirmed that the United States economy is holding up

well, while China's yuan hit a new six-month high.

Mostly though it was another quiet start to the week for

currencies, with FX volatility near all-time lows and little in

the way of key economic data.

Investors are focused on central bank meetings in Japan,

which is on Tuesday, and the European Central Bank meeting on

Thursday.

Moves were slight and volumes thin as Lunar New Year

approaches in Asia and with U.S markets closed for Martin Luther

King day on Monday.

Figures on Friday showed U.S. homebuilding surged to a

13-year high in December, with retail sales also on the rise and

a gauge of manufacturing activity rebounding to its highest in

eight months.

The strength in the United States comes as European economic

data points in the opposite direction, though with possible

signs of bottoming out both there and in China.

"Data released since the previous ECB meeting have been

positive and consistent with the slightly more optimistic tone

struck by (ECB President Christine) Lagarde in December

regarding the economic outlook," RBC Capital Markets' currency

strategist Adam Cole said.

The euro has failed to benefit much from the more positive

noises, however, with U.S. data coming in strong and the

euro/dollar exchange rate firmly stuck within a tight trading

range.

The dollar edged up marginally against a basket of

currencies, with the index at 97.658. The euro was little

changed at $1.1094 EUR=EBS .

"I think the U.S. dollar will continue to outperform against

the major currencies," said Jeffrey Halley, senior market

analyst for Asia Pacific at broker OANDA, adding he counted the

chance of a Federal Reserve interest rate cut soon at zero. "I

think the bar for a rate cut is quite high at the moment."

China's offshore yuan rose to as high as 6.8458 CNH=EBS , a

new six-month high.

China on Friday posted its slowest annual growth figure in

almost 30 years, although December data showed revived business

confidence and quickening factory output. The yuan was last up only marginally at 6.8634 yuan.

Sterling dropped again on Monday to $1.2971 GBP=D3 , down

0.3% on the day, after Britain's finance minister Sajid Javid's

comments at the weekend that Britain would not commit to

sticking to European Union rules in post-Brexit trade talks.

Sterling also weakened versus the euro to 85.46 pence

EURGBP=D3 , down 0.2% on the session.

The pound is now at the mercy of employment data on Tuesday

and business surveys at the end of the week. Money markets now

price in a near 70% chance of a Bank of England rate cut later

this month in the face of a struggling economy.

The Japanese yen was unchanged against the dollar at 110.15

yen JPY=EBS .

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.