Last week’s unexpectedly disappointing economic data points pushed the U.S. Dollar Index to a 6-week trough and saw the greenback falling broadly in individual trading in Asia. According to one analyst in Tokyo, the greenback is likely to stay under pressure while the Federal Reserve seeks additional economic input before making any changes to existing monetary policy. At the same time, unexpectedly poor 4th quarter GDP in Japan paradoxically sent the Yen higher against the U.S. Dollar as analysts say typically occurs as a result of “risk off” trading. Ahead of an increase in Japanese sales tax due to be implemented in April, the slowing momentum is likely to be a concern for FX players.
As reported at 11:15 a.m. (JST) in Tokyo, the USD/JPY traded at 101.60 Yen, a loss of 0.2% and well off last week’s high of 102.70 Yen. The U.S. Dollar Index dipped to a January 1st low of 79.951 .DXY before edging slightly higher to 80.020 .DXY.
Improved GDP in France, Germany Gives Euro a Lift
Meanwhile, the common currency got a boost from strong GDP from both Germany and France, the Eurozone’s key economic drivers, which are helping to propel the Eurozone’s economic recovery. Against the dollar, the Euro traded a 3-week peak at $1.3723. Last week, the European Central Bank’s Mario Draghi confirmed that the monetary policy board would be watching for further signs of deflation before considering any policy change toward more easing; this news is likely to ease the pressure on Draghi at least in the short term.