Members login
USD Graphic Rewind: Dollar Index Ends Lower As China Data Lifts Risk Appetite
Written by article default Thursday, 11 November 2010 09:34
The index got whipped around a little yesterday but ultimately ended its three-day winning streak by closing lower after touching the highest level this month. The index climbed sharply early in the US session as US data came in much better than expected, in the form of falling weekly jobless claims and a narrower than expected trade gap. The buck gave back these gains as US equities climbed back into the black and risk appetite rose modestly. As the US session wound down and Asia got going trade looked like it was likely to remain range-bound as the G20 loomed, which is due to get underway today. However, Chinese data which came late in the day yesterday was far better than expected and added further pressure to the index as riskier assets rose and risk appetite continued to climb. As the over-night session wore on risk appetite slipped back as traders started to consider the implications of strong inflation in the Chinese market. The natural, and obvious, outcome will likely be further tightening from the PBoC to keep consumer prices in check, which lately has come to weigh on sentiment and we have seen the buck claw back some of its losses.
Looking ahead, we have an unbelievably quiet calendar through the rest of the day as the G20 takes centre stage. We anticipate somewhat lackluster trade as investors tread cautiously not wanting to be wrong-footed by any unexpected decisions made at the meet. As such, after several days of bumper gains in the index this is prime time for a little consolidation before the index continues to move higher.
Click here to learn more about DailyFX.