The U.S. dollar traded within a narrow range on Thursday as traders absorbed less pessimistic statements from policymakers overnight and looked forward to new economic data from the United States. Throughout the day, several speakers from the Federal Reserve provided a set of reasons for not feeling an urgent need to start easing monetary policy in the United States soon. Boston Federal Reserve Bank President Susan Collins stated, ‘At present, policy remains in good shape as we carefully assess evolving data and expectations,’ adding that she believes it would be ‘appropriate to begin easing policy constraints later this year.’
The dollar edged somewhat lower after surpassing the 100-day moving average on Monday and Tuesday for the first time since late November, driven by an increase in U.S. job data on Friday. The dollar index, a gauge of the U.S. currency against six major currencies, has recently hovered around 104.00. The euro rose 0.1% to $1.0780, holding above its lowest levels since November 14 at $1.0722 recorded on Tuesday. There was little notable change in the British pound at $1.2630.
The Japanese yen declined by 0.25% against the dollar at 148.50 after Deputy Governor of the Bank of Japan, Shinichi Oshida, stated that the central bank is unlikely to raise interest rates forcefully even after exiting negative interest rates. The yuan remained stable in external trading despite data showing the largest drop in consumer prices in China in over 14 years in January. The data revealed that the Consumer Price Index fell by 0.8% in January compared to the previous year but rose by 0.3% on a monthly basis.
Economists surveyed by Reuters had expected a 0.5% decline on an annual basis and a 0.4% increase on a monthly basis. The Producer Price Index fell by 2.5% on an annual basis in January, compared to expectations of a 2.6% decline in the Reuters survey. The currency received support as the Chinese stock market stabilized after the appointment of a new head of securities regulation, boosting morale despite disappointing data.
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Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
