Better than expected labor data which showed that fewer Americans had filed for unemployment relief last week helped to lift the U.S. Dollar as investors consider that the way forward for the Federal Reserve’s tapering plans are more certain. The upbeat news came in spite of severely cold weather which typically impedes the filing claims process. Likewise giving the greenback a boost, Markit reported that overall manufacturing activity rose to a level unseen in almost four years, with a reading of 56.7 against an expected drop to 53.0 from 53.7. Investors will wait for several more pieces of U.S. data due out shortly, including today’s release of existing home sales which is believed to have fallen in the wake of the winter weather.
As reported at 11:51 a.m. (JST) in Tokyo, the U.S. Dollar Index was steady at 80.320 .DXY, an improvement over Wednesday’s low of 79.927 .DXY. The USD/JPY edged 0.25 higher to trade at 102.52 Yen, up from yesterday’s peak of 101.67 Yen. One analyst in Hong Kong believes that the pair could breach the 103.00 level if and when unexpectedly strong economic data surfaces, however most analysts believe that in the short term the greenback will struggle to get past the 102.80 Yen level.
G20 Meeting Eyed
FX players will also scrutinize the outcome of this weekend’s G20 meeting in Sydney, Australia, with the focus of the meeting participants, i.e. central bank heads and finance ministers, likely to be on the slowdown in global growth and the recent problems in emergent markets. Also likely to be a topic of discussion is the Federal Reserve’s tapering plans and how that might affect the rest of the globe.