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Currency Analyst since 2010

July 18: Asian session

US dollar strengthened versus its counterparts on Thursday. Investors first sold and then bought back the currency in reaction to comments by Fed’s Chairman Ben Bernanke. Bernanke still left intact the prospect of the Fed’s tapering stimulus later this year, but markets were soothed by his pledge to keep policy accommodative for the foreseeable future. Today watch US unemployment claims (12:30 GMT), Philadelphia Fed manufacturing index (14:00 GMT) and Ben Bernanke’s testimony (14:00 GMT).

EUR/USD declined below $1.3100. Euro area will release current account data at 08:00 GMT, and Spain will sell 10-year bonds later today. GBP/USD slid to the $1.5170 area. Watch British retail sales at 08:30 GMT.

USD/JPY keeps strengthening for a second day, testing the levels above the 100.00 mark. Yen weakens ahead of the Sunday's Upper House election where PM Abe's LDP is widely expected to win. USD/CHF rose to 0.9440.

AUD/USD slipped to $0.9160 on a combination of bad economic domestic data and China commodities bubble fears. Australia conference board leading index for May came unchanged (vs. +0.3% prior). NAB business confidence for Q2 came at -1 (vs. prior at 2). Meanwhile, S&P affirmed Australian rating at AAA/A-1, saying outlook is stable. NZD/USD fell from yesterday’s highs of $0.7940 to $0.7860.

USD/CAD returned to yesterday’s high in the 1.0430 zone. The Bank of Canada left the rates unchanged at 1%. Canadian dollar fell as the BOC Governor Stephen Poloz said the nation’s economy has significant slack and inflation remains muted, pushing back the potential for an interest-rate increase.

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