Dollar remains mostly higher vs. other majors currencies

Daily Market Analysis - Investmentstraders

The dollar sustained to trade at 12-year highs against the other major currencies on Tuesday, as tepid Chinese monetary progress data failed to enhance investor confidence and as markets awaited the European Central Bank’s upcoming policy report on Thursday.

EUR/USD fell 0.11% to 1.1591, not far from Friday’s 11-year lows of 1.1459. The euro showed slight effect to a report showing that the closely watched ZEW index of German economic outlook increased to an 11-month high of 48.4 in January from 34.9 in December, ahead of forecasts of 40.0.

The report enhanced hopes that Germany’s market, the euro zone’s largest would get better in 2015 after weakening at the end of last year. The ZEW survey of euro zone financial sentiment boosted to a six-month high of 45.2 from 31.8 in December, beating forecasts of 37.6.

Reaction on the single currency continued vulnerable as investors waited to see if the ECB would embark on an absolute quantitative reduction program at its upcoming meeting on Thursday. Uncertainty over the result of Greek elections, due to be held on Sunday, with anti-bailout party Syriza leading in the polls also weighed.

USD/JPY rose 0.74% to a one-week high of 118.45. The safe-haven yen weakened after data on Tuesday showed that monetary development in China remained steady in the fourth quarter.

China’s economy improved at an annual rate of 7.3% in the three months to December. Economists had estimated growth in the world’s second-largest market to slow to 7.2% from 7.3% in the third quarter.

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On a quarter-over-quarter basis, China’s economy slowed to 1.5% from 1.9% in the third quarter, compared to forecasts for 1.7%. On the other hand, GBP/USD increased 0.31% to 1.5158, off nearly 18-month lows of 1.5058 hit overnight, as USD/CHF decreased 0.64% to trade at 0.8735.

The commodity-linked currencies were mostly lower. AUD/USD edged down 0.15% to 0.8198 and NZD/USD fell 0.80% to 0.7720, even as the New Zealand Institute of Economic Research previously reported that its business confidence index increased to 23 in the fourth quarter from a reading of 19 in the three months to September.

USD/CAD increased 0.33% to trade at 1.1990, still hovering within salient distance of a more than five-year high of 1.2046. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.14% to 92.98, close to Friday’s 12-year peak of 93.56.

The dollar sustained to trade at 12-year highs against the other major currencies on Tuesday, as tepid Chinese monetary progress data failed to enhance investor confidence and as markets awaited the European Central Bank's upcoming policy report on Thursday. EUR/USD fell 0.11% to 1.1591, not far from Friday's 11-year lows of 1.1459. The euro showed slight effect to a report showing that the closely watched ZEW index of German economic outlook increased to an 11-month high of 48.4 in January ...
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