The Australian dollar and the yen were some of the worst-performing major currencies today on improving risk appetite in the markets. The US dollar gained for a second day relative to a basket of major currencies on rising expectations for a June Fed rate hike and solid JOLTS data.
The greenback rose for the third day against the yen to hit an eight-week high of 114.21 yen during the European session. Rising US bond yields have had an impact on the dollar as well. The 10-year Treasury yield reached a fresh 5-week high. The dollar / Swiss franc was lifted to a 3-week high of 1.0055 francs.
A batch of US economic data were out today, starting with the NFIB Index of Small Business Optimism which posted a reading of 104.5 in April from 104.7 in March but above market expectations of 104. It’s important to note the index remained above 104 for the fifth consecutive month. The JOLTS report was upbeat and showed the number of job openings in the US rose to 5.743 million in March from a downwardly revised 5.682 million in the previous month and beat expectations of 5.670 million. It was the highest value since July 2016. The data gave an added boost to the dollar. Upcoming Fed speakers will be interesting to watch for any hints on Fed policy. Minneapolis Fed President Neel Kashkari, Boston Fed’s Eric Rosengren and Dallas Fed’s Rob Kaplan are due to speak.
Data out of Europe today showed industrial production in Germany fell by 0.4% month-on-month in March from a downwardly revised 1.8% increase in February but the drop was less than the expected 0.6% fall. Separate data showed the German trade surplus narrowed in March to 19.6 billion euros compared to February’s revised 21.2 billion and an expected 20.9 billion.
The euro’s direction today was not driven by the data but mostly by broad dollar strength, which pushed the single currency below the key $1.0900 level, further off Monday’s 6-month high. Meanwhile, against the safe haven Swiss franc, the euro hit a fresh 7-month high of 1.0945 francs. The euro traded above 124-yen close to a 1-year high hit on Monday.
The aussie fell to a fresh 4-month low versus the greenback to touch $0.7328. After suffering losses due to disappointing retail sales earlier in Asian trading hours, the aussie took another hit following the Australian government’s budget release which revealed that the main losers in the 2017 budget are banks and businesses who will face increased taxes. The government projects a deficit of A$29.4 billion in 2017-18.
Meanwhile, in Canada building permits in March were down 5.8% from an upwardly revised 2.8% decline in February. A 5.5% rise was expected and so the Canadian dollar weakened after the data. The USD / CAD pair rose to a session high of $1.3745.
Commodities struggled against a stronger dollar, with gold prices edging lower to $1216.20 an ounce, the weakest since mid-March.