The US dollar eased across the board, as positive retail sales data helped lighten concerns about the health of the economy which encouraged some risk taking in foreign exchange markets. The usual beneficiary of such sentiment, the Australian dollar, failed to take advantage though after the Reserve Bank of ’s monetary policy meeting minutes showed policy makers still feel another rate cut may be required. As a result, the news is also weighing on other currencies in the region such as the dollar. The headlines helped take some of the markets focus away from Europe’s debt problems, allowing the euro some breathing space after it had fallen to two-month lows against its rival . The Swiss franc and Japanese yen, the dollar’s chief safe haven rivals also took the opportunity to post modest gains. took a step back versus the euro but still remains within range of 19-month highs.
UK consumer price inflation, although sharply lower than last October’s record 5.2 per cent, is predicted to increase slightly from February’s 3.4 per cent to 3.5 per cent in March. Should the data fall in-line with consensus forecasts, sterling may just build on Monday’s modest improvement against the US dollar if investors feel the Bank of England will have limited scope to print more money under such circumstances.
US dollar
The US dollar edged lower, which was possibly caused by some technical resistance after its rapid rise to two-month highs against the under-pressure euro. The move came despite weaker global stock markets, after investors reacted negatively to some indifferent first quarter US corporate profit reports.
Euro
The euro managed to attract a little interest shortly after breaching two-month lows versus its US counterpart following better-than-expected US economic data that helped sooth growth concerns and take some of the heat out of Europe’s ongoing sovereign debt debacle
Japanese yen
The Japanese yen again reached new peaks against its most-traded peers despite revised Japanese economic data showing that industrial output actually sank by 1.6 per cent (m/m) in February which was far lower than the initial estimates of a 1.2 per cent decline in activity.