Currency Analyst since 2010

Feb. 4: Asian session

Asian shares declined, but US dollar gained after disappointing manufacturing activity data cast doubt on the strength of the US economy. MSCI index of Asia-Pacific shares outside Japan fell about 1.4% to the lowest level since early September. Japanese Nikkei stock average lost 3.3%.

USD/JPY has recovered to 101.20 after the yesterday’s dip to 100.70. Yen weakened from as technical indicators showed that its recent appreciation may have been too rapid. In addition, data showed the nation’s monetary base posted the second-biggest surge on record. It means that the central bank is doubling the provision of money in two years to combat deflation.

Australian and New Zealand dollar both surged. AUD/USD jumped by more than 100 pips to $0.8880, inspired by the RBA meeting outcome. The regulator left the interest rate at 2.5% and shifted to a neutral monetary policy stance. “The most prudent course is likely to be a period of stability in interest rates”, the RBA statement says. NZD/USD followed the Aussie, rising by 70 pips to $0.8120. Kiwi strengthened despite the fact that the NZ finance minister English said the currency was overpriced.

EUR/USD depreciated from the yesterday’s high of $1.3540 to $1.3515. GBP/USD is trading slightly above the $1.6280 low.

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