The greenback weakens broadly on downbeat durable goods order ahead of Fed rate meeting: Jan 28, 2015

Market Review - 27/01/2015 22:47GMT 
 
The greenback weakens broadly on downbeat durable goods order ahead of Fed rate meeting
The U.S. dollar fell
 against other major currencies on Tuesday, as investors turned cautious ahead the outcome of Wednesday's Federal Reserve meeting, while the release of mixed U.S. data fuelled concerns over the strength of the U.S. economy and weighed demand on greenback.

Versus the Japanese yen, dollar fell after a brief rise to 118.66 shortly after Asian open on Tuesday due to broad-based buying of yen versus usd, eur, gbp and aud. The pair continued to ratchet lower in Asia and tanked to 117.85 at European open, then lower to 117.35 in New York morning after the release of mixed U.S. economic reports before recovering. Later, dollar rebounded to 118.00 in New York afternoon.

On Tuesday, the U.S. Commerce Department showed U.S. durable goods orders fell unexpectedly in December and said that total durable goods orders decreased by a seasonally adjusted 3.4% last month, compared to expectations for a gain of 0.5%. Orders for durable goods in November were revised down to a 2.1% drop from a previously reported decline of 0.9%. Meanwhile, core durable goods orders, excluding volatile transportation items, declined by a seasonally adjusted 0.8% in December, disappointing forecasts for a 0.5% gain. Later, U.S. Commerce Department said new home sales climbed by 11.6% to a seasonally adjusted 481,000 units last month, above expectations for 450,000, while the Conference Board showed U.S. consumer confidence strengthened to its highest level in more than seven years in January to 102.9 from an upwardly revised 93.1in December. The January figure was the highest since August 2007 when it was 105.6.

The single currency moved in a relatively narrow range of 1.1224-1.1256 throughout Asia on Tuesday before active cross-buying in euro lifting price above Monday's New York high of 1.1295 to 1.1346 in European morning. Later, euro continued to ratchet higher after a pullback to 1.1261 and eventually rose to 1.1422 in New York morning before retreating. Later, euro dropped to 1.1333 and then moved sideways in New York afternoon.

Although cable moved sideways after marginal gain above Monday's New York high of 1.5103 to 1.5107 in Asia, price briefly climbed to 1.5117 in European morning and then tanked to 1.5060 after release of disappointing U.K. GDP reports. Later, the British pound rallied in tandem with euro and rose to 1.5223 in New York morning before retreating, dropping to 1.5185 and then moved sideways rest of New York session.

The Office for National Statistics said on Tuesday that U.K. GDP expanded by 0.5% in the final three months of 2014, below forecasts for growth of 0.6%. The U.K.'s economy grew by 0.7% in the previous quarter. Meanwhile, U.K. economic growth grew 2.7% in the three months ending December year-over-year, missing expectations for a gain of 2.8%. The U.K. economy expanded at an annualized rate of 2.6% in the third quarter of 2014.

In other news, Japan's Economics Minister Akira Amari said on Tuesday, 'gap between Japan and U.S. narrows in TPP talks over five farm products, including pork; Japan, U.S. not in situation to hold concrete debate over rise in TPP talks, options limited.'

Wednesday will see the release of Australia's Westpac leading index, CPI, RBA Trimmed Mean CPI, Switzerland UBS Consumption indicator, Germany's Gfk Consumer Sentiment, Import Price index, France's Consumer Confidence, FOMC rate decision and monetary policy statement.