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US dollar maintains 81.00

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US dollar maintains 81.00

The US dollar remained well bid against a basket of its major competitors, as market participants continued to monitor the stream of economic data from around the world. The US dollar index hit 81.00 last week after GDP growth exceeded forecasts, according to government data. The US economy accelerated an annualized rate of 2.8 percent in the third quarter, according to the Commerce Department.

The dollar index reached a session high of 81.46 in Europe before falling back to 81.11. Economic activity accelerated at a modest pace in the final month of Q3, according to the Chicago Fed’s National Activity Index. Business optimism among small enterprises fell in October on the heels of declining hiring plans and a waning business outlook. The Business Optimism Index fell 2.3 percentage points to 91.6, according to the National Federation of Independent Business.

The euro edged up 30 pips against the greenback after German CPI rose at an annualized rate of 1.2 percent in October, meeting expectations. The euro has been under pressure since the European Central Bank unexpectedly slashed interest rates to combat the slowest pace of inflation growth in four years. Elsewhere in Europe, pound sterling fell 70 pips after UK consumer inflation slowed to 2.2 percent, the lowest since September 2012. The British pound fell to a low of 1.5854 US dollars before re-taking 1.59.

In North America, the USDCAD set a fresh two-month high, before consolidating below the 1.05 mark. The idle Canadian dollar has been under pressure since the Bank of Canada downgraded its growth forecast into 2015.

The dollar set a two-month high against the Japanese yen, inching closer to the psychological 100 level. The pair remains well supported above 99.50, a gain of more than 0.3 percent. The short-term perspective for the USDJPY remains bullish, although mid-term indicators are mixed. According to UBS, the pair will remain capped below 100 for the next three months.

The greenback has been well supported amid speculation the Fed might pare back asset purchases. Indicators are showing the US economy held its ground amid the 16-day government shutdown, as market participants determine whether the Federal Reserve could unexpectedly cut QE3 before March 2014.

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