US Dollar Weakens against its European Counterparties | IFCM
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US Dollar Weakens against its European Counterparties - 10.12.2013

The US dollar weakened further overnight despite investors’ speculations of getting closer to asset tapering. The Euro and the British pound remained stronger against the US dollar as risk sentiment improved further after Chinese Retail Sales jumped to 13.7% for November, up compared to 13.3% in October. Risk appetite was not impacted by CNY weaker Industrial Production though. One more reason for EUR and GBP strength against USD and JPY is that the ECB and BOE monetary policies are going to get tighter while Fed and BOJ are likely to remain accommodative for longer than their peers.


The US dollar index dipped to as low as 79.96 in the recent trading moving closer to major support at 10-month low at 78.95, defying previous week positive data on employment and growth.


US Dollar Index
US Dollar Index


The common currency touched a six week high 1.3769 against the US dollar early on Tuesday. The forex pair is still buoyed by previous week comments of ECB and estimates of higher growth in 2014 for the Euro zone. Against the Japanese Yen, the Euro advanced to a more than a 5-year peak at 142.19, ahead of French industrial production release and ECB President, Mario Draghi speech. Elsewhere, the British pound surged slightly above cap at 1.6443 to a new 27-month peak at 1.6466 ahead of Manufacturing production data and Trade Balance release.


The Japanese Yen is further weakened today as the risk appetite improves and investors seek for higher yielding assets. Moreover, the yesterday release of weaker than anticipated Japanese GDP data raises possibilities of BOJ to add stimulus. Adding to that the greenback remains elevated only with the Japanese Yen compared to other majors due to Fed asset tapering expectations. The USDJPY is currently fluctuating at 103.32, slightly below resistance at 5-year peaks at 103.72. In our opinion, the forex pair is likely to inch above 103.72 nonetheless we are cautious for a fake break.


EURJPY
EURJPY


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