The U.S. Dollar was broadly higher in the wake of unexpectedly strong economic data which appears to have convinced FX investors that the Federal Reserve Bank is likely to continue to taper as had been initially promised. On Friday, the president of the Richmond, Virginia Federal Reserve branch reaffirmed that the improving signs in the U.S. labor market was sufficient justification for the Fed to reduce monthly asset purchases. Overall trading volume is expected to be lighter than normal as a result of a federal holiday which will close markets in the U.S.
As reported at 9:17 a.m. (JST) in Tokyo, the U.S. Dollar Index was steady at 81.215 .DXY, following last week’s 0.7% rise. The EUR/USD traded at $1.3530, close to Friday’s 2-week low of $1.3517. The USD/JPY eased to 104.27 Yen while the EUR/JPY slipped to 141.06 Yen.
China Data Could Weigh on Aussie
The recent release of mixed economic data from China is likely to result in some short term volatility for commodity linked currencies such as the Aussie and Kiwi Dollars, as both the Australian and New Zealand economies are heavily dependent on the Chinese economy for its own growth. Investors were likely looking for more stability in the data that would support some recent signs that the Chinese economy was improving, however with the exception of year-over-year GDP which came in slightly above expectations, the rest of the data came in just at or below expectations. Despite the data, the AUD/USD pair was trading slightly higher at $0.8781 as investors appear to be hoping for some recovery after last week’s selloff.