Dollar finds help in tame inflation report

British pound – The pound suffered a decline against the euro as investors riddled with envy at the widening growth differential between the two continental economies sold the pound. The euro rose to buy 87.68 pence while the pound struggled to match the single currency’s performance with the dollar as it saw a daily loss build momentum in mid-morning Manhattan trading to $1.6251 and bordering on a fresh two-week low.

Japanese yen – The dollar faced a volatile session versus the Japanese unit. The yen strengthened on risk aversion grounds as European equity prices failed to move ahead reaching ¥80.34. U.S. consumer prices boosted demand for dollars lifting it to ¥80.94 before easing to equilibrium right in the middle of the daily range. The yen was also boosted overnight following an assessment from Chief Cabinet Secretary Yukio Adano who sized damages payable by Tokyo Electric in “the trillions.” His words sparked speculation that Tepco had embarked on a repatriation program to bring funds home for settling claims against it. Elsewhere another economic minster blames the yen’s most recent bout of strength on a weaker dollar as he attempted to diffuse the need to artificially weaken the domestic unit.

Aussie dollar – The Aussie traded both sides of unchanged in the face of a second weekly decline for Asian stocks. The MSCI Asia Pacific index ended the week with a net 1% decline. Dealers are still taking a candid approach to the high-yielding Aussie in light of an April employment report that saw employers unexpectedly cut full-time positions. The concern that a weaker labor market will offset the central bank’s desire to raise rates in order to counter inflation is currently hampering the Aussie and after demand for the greenback grew in to the weekend the unit is ending the week on a downbeat note at $1.0648 U.S. cents.

Canadian dollar – The Canadian dollar also lost a ding-dong battle with the greenback as the weight of evidence favored the U.S. unit as dealers squared books in to the weekend. With no economic data due north of the border the loonie lost a back and forth battle and recently bought $1.0334 U.S cents down from $1.0379 cents Thursday.

Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

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About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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