The US dollar has been on the back foot for long days. Some had already suspected that this move was more than a correction but actually a change of course.
While it is too early to say that this correction is over, the greenback is now backed in a more serious manner. 3 events today gave the dollar a significant boost:
- Lockhart hawkishness: Dennis Lockhart, a member of the FOMC that is quite in the balance and is not an outright dove nor hawk, made it clear that rate hikes are coming. Yes, the US dollar is a worry for the Fed and could hurt growth, but only in a “slight” manner. He also put July as an option for a move on the rates.
- Better jobless claims: The weekly barometer of US jobs continued falling and hit 282K. Perhaps more importantly, the 4 week moving average finally fell back under 300K, removing doubts that the job market could be slowing after a very good period.
- Strong Services PMI: Markit’s purchasing managers’ index plays second fiddle to the ISM numbers. Nevertheless, this early release for the month of March showed an improvement in the largest sector in the US. A score of 58.6 points was better than 57.1 in February, better than expected and as an absolute figure it reflects strong growth.
Currency movements:
- EUR/USD has retreated from the 1.0950 level and has gone down to 1.0910.
- GBP/USD is back under 1.49 despite strong data from the UK,.1.4820 is the current level.
- USD/JPY climbed back above 119.
- USD/CAD, which was pushed lower due to the crisis in Yemen that boosted oil prices, is up to 1.2480.
- AUD/USD is backing away from the 0.79 level to 0.7825.
- NZD/USD is below 0.76, hanging on to support at 0.7585.
More: 3 Reasons Why Selling EUR/USD Still Attractive – RBS
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