Edited by Vani Rao
USD appreciates against Euro, GBP, and Japanese yen; EUR/USD falls 0.12%
The US dollar finished higher against the Euro on Friday, June 6, 2014, following the release of encouraging US jobs report, and a day after the Eurozone announced an array of economic measures to prevent the threat of low inflation in the economy.
The demand for the US dollar consolidated after US Department of Labor reported that the US economy added jobs for the fourth consecutive month. The report indicated 217,000 job additions in May, which was slightly below the expected 218,000 additions. Meanwhile, the number of job additions in April was revised to 282,000. The country’s overall unemployment rate remained unchanged at a five-and-a-half year low of 6.3%.
Meanwhile, on Wednesday, June 4, 2014, as expected, the European Central Bank (ECB) announced fresh economic measures to combat the low levels of inflation in the Eurozone. The ECB acted after a report showed that the annual rate of inflation in the Eurozone slowed to 0.5% in May, much lower than the ECB’s target of close to 2%. As a measure of its economic recovery, the ECB trimmed down the main refinancing rate to a record low of 0.15%. Moreover, in order to encourage lending to businesses, the bank levied negative deposit rates on commercial lenders.
During the trading session on Friday, June 6, 2014, the EUR/USD pair oscillated between 1.3621 and 1.3677, before setting at 1.3643, down 0.12%, as indicated in the graph below. However, for the week, the Euro/USD pair mapped gains of 0.34%. At the time of last reporting, the EUR/USD was trading at 1.3642, down 0.10%.
The Eurozone and the US are scheduled to release key economic data in the forthcoming week, which are likely to cause significant movements in the currency market. Analysts will factor the outcome of data releases by both these economies, while keeping a close track of the following events:
- On Tuesday, June 10, 2014, in the Eurozone, France is slated to announce data on industrial production.
- On Thursday, June 12, the Eurozone is scheduled to release data on industrial production, while the ECB will publish its monthly bulletin. Meanwhile, the US will publish its weekly Department of Labor report on initial jobless claims, in addition to data on import prices and retail sales.
- Finally, on June 13, the US is slated to report data on producer price inflation and the University of Michigan preliminary data on consumer sentiment.
The US dollar edged higher against the GBP on Friday, June 6, 2014, on the back of an upbeat US employment report, which showed 217,000 job additions in May.
However, the demand for the GBP was supported amid growing expectations for a rate hike by the Bank of England (BoE) during the early part of next year. Earlier during the week on Wednesday, June 4, a report showed that the UK services sector expanded at a faster-than-expected rate in May, raising prospects of an economic recovery in the region.
For the week ended June 6, the GBP posted gains of 0.35% against the greenback. During the trading session on Friday, June 6, 2014, the GBP/USD pair fluctuated between 1.6782 and 1.6845, before finishing the session at 1.6802, down 0.04%, as shown in the graph below. At the time of last reporting, the GBP/USD was trading at 1.6808, up 0.01%.
In the forthcoming week, the UK and the US are scheduled to report a series of key economic data. Currency experts will be keeping a close watch on the following data releases while framing their trading strategies.
- On Tuesday, June 10, 2014, the UK is expected to release data on industrial and manufacturing production.
- On June 11, the UK is slated to publish data on the change in the number of people employed and the unemployment rate, in addition to data on average earnings.
- On June 11, BoE Governor Mark Carney will address an event in London.
Similarly, the upbeat US employment data report enabled the US dollar to post a slight gain against the Japanese yen on Friday, June 6, 2014.
On Friday, June 6, the USD/JPY pair oscillated between 102.11 and 102.61, before finishing the day at 102.48, up 0.05%, as shown in the graph below. At the time of final reporting, the USD/JPY was trading at 102.44, down 0.04%.
Moving forward, the USD/JPY pair is likely to fluctuate ahead of significant data releases by Japan in the coming week. Industry experts will be looking forward to changes in the relative price of the US and the Japanese yen in the coming week, ahead of the following data releases:
- On Monday, June 9, Japan is expected to release revised data on first-quarter growth, as well as reports on bank lending and the current account.
- On, June 10, Japan is scheduled to release data on tertiary industry activity.
- On Wednesday, June 11, Japan is slated to publish the latest reading of its BSI (business survey index) manufacturing index.
- On June 12, Japan is expected to produce data on core machinery orders.
- Finally, on June 13, the Bank of Japan is expected to announce its benchmark interest rate and publish its monetary policy statement. The announcement will be followed by a press conference.