Dollar Falls Amid Flurry Of News, Speculation

Dollar Falls Amid Flurry Of News, Speculation

The value of the dollar has sunk today, despite the White House denying a report from Bloomberg that President Obama had described the strength of the dollar as a problem.  



Dollar Falls Amid Flurry Of News, Speculation
Dollar Falls Amid Flurry Of News, Speculation

The dollar has fallen against a wide selection of commonly-traded currencies today, though the declines have mostly been modest: GBP/USD climbed 0.11% to 1.5285, USD/CHF fell 0.33% while USD/JPY dropped 0.42%. The dollar is retreating from a strong position, though, a position that was bolstered on Friday by the strength of US jobs data for May.

The dollar’s most pronounced loss on Monday has been against the euro, with EUR/USD jumping 0.75% to 1.1199, a move that seems to have been driven more by the strength of the German industrial sector than by Bloomberg’s disputed story. It was announced today that German industrial production surged 0.9% in April, rebounding strongly from a 0.4% decline in March, and comfortably exceeding expectations for a 0.6% rise. Year-on-year the change was +1.4%, boosting hopes that the sector has led GDP growth higher in the second quarter.

USD/CAD fell 0.17% to 1.2412, after the Loonie was boosted by news of stronger-than-expected housing starts last month. The annual pace of construction starts on new residential buildings rose to 201,705 units in May, more than 10% higher than April’s upwardly-revised rate of 183,329. It’s too early to tell whether this latest jump is the start of a new upward trend, or simply another volatility spike in an otherwise sideways pattern, but if June’s numbers can keep above the 200,000-mark it will be a strong sign for the Canadian economy.

US stocks opened little changed on Monday, dipping ever so slightly in the absence of any significant domestic economic releases. Shortly after the open, the Dow Jones was down 15 points or 0.09%, while the S&P 500 Index slipped the same percentage to 2091.0. The strength of Friday’s employment report has tugged expectations of a Fed rate hike a little closer, which is always going to work to constrain risk appetite in the absence of any other catalysts. The week’s economic calendar remains fairly thin for the US until Thursday, when we have May’s retail sales, followed on Friday by the preliminary June reading for the University of Michigan’s Index of Consumer Sentiment. Though consumer sentiment has been holding up fairly well, we haven’t really been seeing a corresponding level of health in spending. Retail sales in April came in disappointingly flat, but a big bounce is forecast for May: the consensus estimate is for growth of 1.3%, though a significant chunk of that is predicated on auto sales and the core level may be less stellar.


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