The U.S. Dollar Index moved higher during the Asian session, finding support after the release yesterday of solid growth data from the U.S. for the 4th quarter of 2013. FX players appear hopeful that the data could help to alleviate growing concerns over developing economies as well as mitigate the impact of the recent selloff in emergent market currencies. One analyst in Tokyo said that he believes that markets will have the chance to refocus on U.S. economic strength and that the impact on G10 currencies from the emergent market selloff will diminish in the short term.
As reported at 11:35 a.m. (JST) in Tokyo, the U.S. Dollar Index traded at 81.055 .DXY after rising to a peak yesterday at 81.135 .DXY. For the month of January, the Index, which is used by FX traders as a measure of the greenback’s relative strength against major currencies, has gained 1.3%. The EUR/USD slipped to a weekly trough at $1.3543. The USD/JPY traded at 102.78 Japanese Yen, moving away from this week’s 7-week trough which occurred in the wake of the emerging markets selloff.
Fed Tapering Notion Finds Support
Earlier this week the Federal Reserve Bank curtailed its monthly bond purchasing program which may have pushed the panic button for emerging economies. However, this GDP data at 3.2% annualized in line with expectations is helping to support the consensus view that the Fed can safely continue to taper, a view which provides solid footing for the U.S. Dollar.