US Dollar Rises on Back of Lackluster Eurozone Economic Reports

Edited by Vani Rao

USD hits five-week high against the Euro, GBP/USD pair finishes lower

The US dollar gained 0.34% against the Euro on Thursday, April 3, 2014. The Euro/USD pair rose to its five-week high after the European Central Bank (ECB) announced that it is likely to implement unconventional economic measures to keep a check on deflation in the Eurozone. In the policy meeting on Thursday, April 3, ECB President Mario Draghi said that the possibility of negative interest rates was also discussed during the meeting. The ECB decided to leave interest rates unchanged at a record low 0.25%.

Meanwhile, in the US, the Institute of Supply Management (ISM) reported that its non-manufacturing purchasing manager’s index for March increased to 53.1 from 51.6 in February, narrowly missing the expected reading of 53.5.

In addition, the US Department of Labor reported that the number of individuals filing for unemployment benefits rose by 10,000 to 326,000. Analysts had expected jobless claims to rise by 7,000 in the past week.

The Euro/USD pair closed Thursday’s trading session at 1.3720, after oscillating between 1.3698 and 1.3805, as indicated in the graph below. At the time of last reporting, the Euro/USD pair was trading at 1.3701, down 0.16%.

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On Friday, April 4, 2014, the US government is expected to announce data on non-farm payrolls and unemployment rates. The release will be closely monitored by market experts since it is likely to cause currency fluctuations between the EUR/USD pair.

GBP/USD

The US dollar firmed up against the GBP on Thursday, April 4, 2014, following soft UK service-sector data, which missed the market expectations. As per the reports, the UK service sector purchasing managers’ index (PMI) declined to 57.6 in March from 58.2 in February, missing the analysts’ expectations of 58.1.

The US dollar still managed to hold ground against the GBP, even after weaker-than-expected jobs data and non-manufacturing PMI report.

Meanwhile, another report showed that the US trade deficit for February broadened to $42.3 billion, compared to a deficit of $39.28 billion in the previous month. The data missed the analysts’ forecasts, who expected the US trade deficit to narrow to $38.5 billion.

The GBP/USD pair fluctuated between 1.6571 and 1.6661, before finishing Thursday’s session 0.17% lower at 1.6598, as shown in the graph below. At the time of the last reporting, the GBP/USD pair was trading at 1.6684, down 0.08%.

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USD/JPY

The US dollar edged higher against the Japanese Yen on Thursday, April 3, 2014. The USD/JPY pair extended its gains from the previous trading sessions to close Thursday’s session at 103.93, up 0.05%. The USD/JPY pair opened the session at 102.88, and traded in the intra-day range of 103.81 and 104.11, as indicated in the graph below.

At the time of final reporting, the USD/JPY pair was trading at 103.87, down 0.05%.

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Analysts will be looking forward to the currency fluctuations between the USD/JPY pair, post the release of the US jobs report on Friday, April 4, 2014.

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