Dollar ends mixed vs G4 currencies, aud and nzd hit multi-month highs on risk appetite

Market Review - 13/07/2017  22:20GMT  

Dollar ends mixed vs G4 currencies, aud and nzd hit multi-month highs on risk appetite

The greenback ended the day higher against majority of its peers on Thursday as investors took profit dollar's recent losses on the slightly dovish statement from Federal Reserve Chair Janet Yellen. The antipodean currencies climbed to multi-month highs vs the usd on return of risk appetite as U.S. stock markets hit record highs.  

Versus the Japanese yen, although dollar resumed its recent losing streak and dropped to session low at 112.86 in Asian morning, price pared its losses and recovered to 113.19 in early European morning, then rose to 113.47 in New York morning on the greenback's broad-based strength. 

Although the single currency traded with a firm bias in Asia and edged up to session high at 1.1457 at European open, price pared its gains and briefly dropped on dovish comments from ECB's Rimsevics to session lows of 1.1371 ahead of New York open before rebounding swiftly to 1.1418 on WSJ report that the European Central Bank is likely to signal at its September's policy meeting that its asset purchase programme will be gradually wound down next year. The euro retreated to 1.1382 in New York midday and later moved narrowly for rest of the session.

ECB Governing Council member Ilmars Rimsevics said 'QE could continue for another couple of years given low inflation.' 

Reuters reported the ECB is likely to signal in September that its 2.3 trillion euros bond-buying programme would be gradually wound down next year, the Wall Street Journal reported on Thursday. 

Financial markets overwhelmingly expect the ECB to decide in September on the future of its stimulus policy beyond the end of this year, with analysts split between those who expect a one-off reduction and a definitive tapering of the programme.  

Central bank officials who spoke to Reuters recently have pointed to September or, at the latest, October as a likely time for a decision but stressed this depended on economic data and market conditions.  

The British pound traded with a firm bias in Asia and rose to 1.2952 in European morning on hawkish comments from BoE's McCafferty. Cable then briefly gained to an intra-day high at 1.2955 at New York open on cross-buying of sterling especially vs euro before stabilising. 

Bank of England should consider unwinding its 435 billion pound quantitative easing programme earlier than planned, BoE policymaker Ian McCafferty told the Times in an interview. 

On the data front, the number of individuals filing for initial jobless benefits in the week ending July 8 decreased by 3,000 to a seasonally adjusted 247,000 from the previous week's revised total of 250,000, the U.S. Department of Labor said. Analysts expected jobless claims to fall by 5,000 to 245,000 last week. 

Data to be released on Friday: 

New Zealand manufacturing PMI, Japan industrial output, capacity utilisation, Italy CPI, HICP, trade balance, EU trade balance, U.S. CPI, core CPI, retail sales, industrial output, capacity utilisation, manufacturing output, business inventories and consumer sentiment.