6 May 2014
USD remains offered - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, underlines the offered tone prevailing around the USD.
Key Quotes
"The US dollar continues to remain on the defensive in the near-term despite further evidence that the US economy is rebounding strongly after the sharp slowdown in Q1. The release yesterday of the ISM non-manufacturing survey revealed that business confidence increased by 2.1 point to 55.2 in April reaching its highest level since August 2013."
"The survey adds to the recent run of improving economic data releases from the US including the 1.2 point increase in the ISM manufacturing survey in April, and acceleration in employment growth. Last week’s non-farm payrolls report revealed that employment growth has accelerated over the last three months to April averaging 238k jobs created/month compared to 203k jobs /month over the last six months."
"The sharp drop in the unemployment rate also regained downward momentum as the pick up in labour force participation recorded earlier this year was reversed in April further signalling that labour market conditions are tightening. The report reinforces our view that the Fed will begin raising rates from the middle of next year."
"However, US yields still remain under downward pressure in the near-term despite improving US economic data which is failing to support the US dollar. The 10-year US Treasury bond yield is currently testing key support at 2.6%. The lack of upward pressure upon wages so far in the US is helping to dampen US yields, with average hourly earnings rising by just 1.9% in April."
Key Quotes
"The US dollar continues to remain on the defensive in the near-term despite further evidence that the US economy is rebounding strongly after the sharp slowdown in Q1. The release yesterday of the ISM non-manufacturing survey revealed that business confidence increased by 2.1 point to 55.2 in April reaching its highest level since August 2013."
"The survey adds to the recent run of improving economic data releases from the US including the 1.2 point increase in the ISM manufacturing survey in April, and acceleration in employment growth. Last week’s non-farm payrolls report revealed that employment growth has accelerated over the last three months to April averaging 238k jobs created/month compared to 203k jobs /month over the last six months."
"The sharp drop in the unemployment rate also regained downward momentum as the pick up in labour force participation recorded earlier this year was reversed in April further signalling that labour market conditions are tightening. The report reinforces our view that the Fed will begin raising rates from the middle of next year."
"However, US yields still remain under downward pressure in the near-term despite improving US economic data which is failing to support the US dollar. The 10-year US Treasury bond yield is currently testing key support at 2.6%. The lack of upward pressure upon wages so far in the US is helping to dampen US yields, with average hourly earnings rising by just 1.9% in April."