The US dollar has eased back against its rivals after reaching multi-year highs against several of its rivals following downbeat data.
Investors are cashing in their profits from the greenback’s recent rallies. As such, the US dollar has fallen lower against its rivals today, falling 0.48% against the Japanese yen and 0.65% against the euro.
Factory orders in the US fell in September for the second consecutive month, dropping 0.6% in line with expectations. Though expected, this data does dampen optimism for a strengthening economic recovery. The data triggered investors to sell the greenback for profits, wiping out previous gains.
US trade data showed the country’s trade deficit widened to $43.03 billion in September. Analysts had expected the trade gap to widen to $40.0 billion.
Elsewhere, the yen recovered after recent losses following the Bank of Japan’s decision to raise its monetary base target to an annual increase of 80 trillion yen. It is the central bank’s hope that this move, which came as a shock to investors, will steer the economy away from deflation.
The US dollar soared against the Japanese yen today after markets after the Bank of Japan made a surprising move to expand its stimulus programs.
The greenback gained 1.49% on the yen after the Japanese currency succumbed to broad selling pressure following the Bank of Japan’s statement last week. The BOJ said that it would raise its monetary base target to an annual increase of 80 trillion yen from between 60-70 trillion yen. The bank’s aim is to prevent deflation and achieve its inflation goals.
Additionally, on Friday a Japanese government panel approved plans to raise its holding in foreign stocks to 25% from 12% of its portfolio. These changes have sent investors away from the normally safe-haven yen especially since the moves came as a surprise to global markets. The US dollar as such has strengthened as US policy and Japanese policy continue to take opposite directions in regard to monetary policy, with the Federal Reserve having just stopped its bond buying program last week.
Upbeat data from the US also added to the greenback’s support as manufacturing PMI rose to 59.0 in October from 56.6 the previous month.
The US dollar is trading lower against its rivals today following a soft report on US durable goods, though the consumer confidence report managed to save the currency from further losses.
The greenback was down 0.26% against the British pound and 0.32% against the euro. The US Dollar Index was down 0.26% earlier on. This comes after US durable goods data disappointed expectations. Durable goods are defined as heavy products that last more than three years and include trains and planes, etc. A report showed that total durable goods orders including transportation decreased by 1.3% when a gain of 0.5% was predicted.
Core durable goods orders which exclude transportation dropped 0.2%, below predictions for a 0.5% rise.
This data sent the dollar down against its rivals as investors continue to worry about when the Federal Reserve may raise interest rates, especially after yesterday’s soft housing data.
The Conference Board however reported that consumer confidence rose to 94.5 this month from 89.0 in September. This favourable report shows good job and business conditions and lightens the burden on previous soft data.