Dollar recovers broadly on short covering after Mnuchin's usd comments: April 20, 2017

Market Review - 19/04/2017  22:30GMT  

Dollar recovers broadly on short covering after Mnuchin's usd comments

The greenback gained some respite and staged a rebound against majority of its peers on Wednesday as investors booked profits on the buck's recent losses. Also, comments by U.S. Treasury Secretary in European morning that President Trump absolutely not trying to talk down U.S. dollar. 

Reuters reported Mnuchin asked if Trump's remarks to the WSJ were an attempt to talk down the dollar, Mnuchin was quoted in Wednesday's FT as saying "absolutely not, absolutely not", led to steady short covering in the greenback. 

Versus the Japanese yen, dollar traded with a firm bias in Asia and gained to 108.97 in European morning. Price continued to ratchet higher and hit an intra-day high at 109.18 in New York morning on the greenback's broad-based rebound before easing off. Price later retreated to 108.69/70 in New York afternoon on cross unwinding in the Japanese yen. 

The single currency remained under pressure in Asia and retreated to 1.0712 at European open on profit taking after U.S. Mnuchin's comments. Despite a brief rise to 1.0737 in European morning, euro later dropped to session lows of 1.0701 in New York morning on broad-based recovery in the usd and later moved narrowly in New York afternoon. 

The British pound took a breather after Tuesday's spectacular rally and retreated to 1.2809 at European open. Despite a brief rebound to 1.2859 at New York open, cable dropped to 1.2802 in New York morning after the UK Parliament voted in favour of an early election. Cable later fell to session lows of 1.2770 on further long liquidation in sterling vs usd, eur and the yen. 

UK Parliament votes by 522 to 13 in favour of early National election. 

In other news, ECB's Coeure said 'still have to be convinced that return of inflation to 2% is sustainable; taking support away wud change picture; we see prospect for normalisation, we are serious about guidance; balance of economic risk is by n large flat; personally don't see risks as tilted to downside; not much discussion today about adding to ECB balance sheet.' 

On the data front, Eurostat said that Euro zone CPI remained unchanged at a seasonally adjusted annual rate of 1.5%, from 1.5% in the preceding month. Analysts had expected Euro zone CPI to remain unchanged at 1.5% last month. 

Data to be released on Thursday: 

New Zealand CPI, Japan exports, imports, trade balance, Australia business confidence, Germany PPI, Italy WPI, U.S. jobless claims, leading index and EU consumer confidence.