Daily Afternoon Report 28/01/2016
The dollar extended losses against the other major currencies today, after the release of mixed U.S. economic reports, while investors were still digesting uncertainty caused by the Federal Reserve’s latest policy statement. The U.S. Commerce Department said that total durable goods orders tumbled by 5.1% last month, compared to forecasts for a decline of 0.6%.
Core durable goods orders, which exclude volatile transportation items, fell by 1.2% in December, disappointing expectations for a drop of 0.1%. Separately, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending January 22 decreased by 14,000 to 278,000 from the previous week’s total of 294,000, which was the highest since April. Analysts expected jobless claims to fall by 12,000 to 282,000 last week.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.22% at 98.81.
On Wednesday, the Fed left interest rates on hold at the conclusion of its two-day policy meeting Wednesday, after raising interest rates for the first time in nearly a decade in December. The U.S. economy is still on track for moderate growth and a stronger labor market even with “gradual” rate increases, the bank said without giving any indications on the pace of future rate hikes.
Investors are turning to the conclusion of the Bank of Japan meeting on Friday.
Elsewhere, Sterling found support after the U.K. Office for National Statistics said fourth-quarter gross domestic product grew 0.5%, matching forecasts after growth of 0.4% in the three months to September. The U.K. economy grew at an annual rate of 1.9% in the three months to December, slowing from 2.1% in the third quarter and the smallest increase since early 2013.
The commodity-related Canadian dollar was boosted since oil prices remained around $32 a barrel on Tuesday, after falling to 12-year lows below $27 a barrel last week.
Earlier today, the Reserve Bank of New Zealand held its benchmark interest rate at 2.50%, in a widely expected move. However, RBNZ Governor Graeme Wheeler indicated that further rate cuts may be needed.
At the same time, Statistics New Zealand reported that the trade deficit narrowed to NZ$53 million in December from a revised deficit of NZ$799 million in November. Analysts had expected the trade deficit to narrow to NZ$131 million last month.