Dollar falls against yen after Fed Dudley's comment but gains vs euro and Swiss franc: April 03, 2017

 Market Review - 01/04/2017   09:18GMT  

Dollar falls against yen after Fed Dudley's comment but gains vs euro and Swiss franc

The greenback pared its early gains against the yen on Friday after dovish comments from Federal Reserve officials together with weaker-than-expected U.S. consumer confidence data, however, price extending this week's rise vs the euro and Swiss franc in New York session. 

Fed's Dudley said 'a couple more hikes this year seems reasonable; likely not at stage where there is great urgency to tighten policy; not huge rush to tighten; economy clearly not overheating; increase in sentiment not yet translated into hard data; Q1 U.S. GDP may be a bit weaker; trimming balance sheet a substitute for rate hikes; cud pause raising rates at that time.' 

In a report, the University of Michigan said that consumer sentiment fell to a seasonally adjusted 96.9, from 97.6 in the preceding month. Analysts had expected University of Michigan consumer sentiment to remain unchanged at 97.6 last month.

Versus the Japanese yen, despite the greenback rose to session high at 112.20 in Asian morning, price pared its gains and dropped to 111.74 at European open, then later tumbled session lows of 111.25 on active cross-buying in yen especially vs euro and dovish comments by Fed's Dudley. 

The single currency traded sideways in Asia and rebounded to 1.0698 in European morning. Despite a brief drop to session low at 1.0671 in Europe, euro rose to an intra-day high at 1.0702 in New York morning on dollar's broad-based weakness, renewed selling later emerged and knocked the pair to a 2-week low of 1.0652 near the close. 

Although the British pound dropped sharply from Asian high at 1.2509 to session low at 1.2434 in European morning, cable pared its losses and rallied to an intra-day high at 1.2539 in New York morning on dollar's weakness together with active cross-buying of sterling especially vs euro. The pound hit session highs of 1.2574 at the close. 

In other news, Fed's Bullard said 'ok to raise U.S. rates a bit, but hard data like GDP not screaming for tighter policy; Fed does not need to be preempitve on rates with U.S. inflation tame; repeats backing for shrinking bond portfolio now.' 

On the data front, research group Kingsbury International said that the Chicago PMI rose to a seasonally adjusted 57.7, from 57.4 in the preceding month. Analysts had expected the Chicago PMI to fall to 56.9 last month. 

Data to be released this week: 

Japan's tankan data, manufacturing PMI, Australia retail sales, building permits, China manufacturing PMI, Swiss manufacturing PMI, Italy manufacturing PMI, France manufacturing PMI, Germany manufacturing PMI, EU manufacturing PMI, PPI, unemployment rate, UK manufacturing PMI, Canada manufacturing PMI, U.S. manufacturing PMI, ISM manufacturing PMI and construction spending on Monday. 

New Zealand business confidence, China market holiday, Australia exports, imports, trade balance, RBA rate decision, UK construction PMI, EU retail sales, Canada exports, imports, trade balance, U.S. trade balance, redbook retail sales, ISM New York and factory orders on Tuesday. 

Australia service index, Italy services PMI, France services PMI, Germany services PMI, EU services PMI, UK services PMI, U.S. ADP employment, services PMI, and ISM non-manufacturing PMI on Wednesday. 

China services PMI, Japan consumer confidence, Germany industrial orders, Swiss CPI, U.S. jobless claims and Canada building permits on Thursday. 

Japan leading economic index, Swiss unemployment rate, Germany industrial production, current account, imports, exports, trade balance, France exports, imports, trade balance, current account, UK house prices, industrial production, manufacturing production, trade balance, Italy retail sales, Canada unemployment rate, employment change, Ivey PMI, U.S. average hourly earnings, unemployment rate, non-farm payrolls, private payrolls and wholesale inventories on Friday.