US dollar strengthens against commodity peers, stabilizes against safe havens
The US dollar stabilized against a basket of its competitors as traders reacted to several news releases. The greenback strengthened against its commodity peers as renewed fears over a China credit crisis continue to make headway. The European and Asian safe havens edged lower but remain well supported after the markets showed little reaction to US data.
Orders for US durable goods increased 3.7 percent in September, the most in three months, after demand for commercial and military aircraft offset the drop in business equipment. However, core durable goods orders excluding transportation fell 0.1 percent, below expectations for a 0.5 percent gain. Shipments of non-defense capital goods fell 0.2 percent after rising 1.1 percent the previous month. This could have a negative impact on third quarter growth, as shipments of these products are used in calculating gross domestic product.
Elsewhere, consumer confidence fell to its lowest level since December 2012, according to a monthly sentiment index from Reuters and the University of Michigan. The federal government shutdown lowered confidence in the current situation as well as the future outlook. Consumer sentiment reached a six-year high in July, and has declined ever since.
The US dollar index stabilized around the 79.2 region, after gaining at least 25 pips against the Canadian and Australian dollars. The USDCAD has soared more than 1.5 percent this week after the Bank of Canada cut its growth forecast into 2016. The Aussie continues to struggle against a backdrop of uncertainty emanating from China. The AUDUSD fell 40 pips to 0.9583.
In Europe, the British pound eased off its highs, falling below 1.62 US dollars. The GBPUSD reached a session high of 1.6247 in European trading after UK GDP met expectations, accelerating 0.8 percent in the third quarter. Elsewhere, the euro held on to Thursday’s gains, trading at 1.38 US dollars. The single currency was unaffected by US durable goods orders.
The US dollar fell to its lowest level in nearly three weeks against the Japanese yen, hitting 96.95 in the early European trade. The USDJPY would later consolidate at 97.3. The recent inflation report from the Japanese Statistics Bureau showed record stimulus appears to be working. The country’s National Consumer Price Index rose at an annualized rate of 1.1 percent in September, beating estimates.
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