Cautious Traders Ahead of US Data

The U.S. Dollar was trading within a tight band earlier as investors’ uncertainty continues to grow over the Federal Reserve Bank’s decision as to whether or when the current quantitative easing program would be tapered off. Investors are also considering recent economic data from the U.K. and Eurozone which is leading to increased speculation that the central banks there might also be on the verge of tightening their monetary policy, thus putting further pressure on the Dollar. Markets were keenly watching the outcome of CPI data from the U.S. just released in the hope that it would provide some further insight into the Fed’s way of thinking, but expectations of a rise to 1.7% from 1.6% were met. Initial jobless claims for the past week came in below expectations at 320K new claims. It is unlikely that the data will provide any clarity for investors, however.

The U.S. Dollar Index was trading at 81.50 .DXY, a loss of 0.25% and once again close to both Tuesday’s and Wednesday’s lows; the Index is used by investors as a way to gauge the greenback’s strength relative to several other major currencies. The EUR/USD pair was trading at $1.3295 ahead of the data release, a few pips from the session high of $1.3306. The USD/JPY pair was trading higher at 98.2050, with resistance at 98.50 Yen still not breached. The GBP/USD pair was trading higher at $1.5582, only a few pips from the session high of 1.5595 and moving well away from Wednesday’s low of $1.5421.