Weak US Data Weighed on US Dollar, Eyes on Sterling GDP Data - 25.4.2013

The US dollar weighed on weaker economic data yesterday and dropped broadly against its major peers. The US dollar index after inching up to 83.15 returned back lower to support at 82.65. US Core Durable Goods Orders recorded at minus 1.4% change in March, missing estimations of 0.5% increase and fell lower than minus 0.7% change in February, Durable Goods Orders was weaker than expected too. The precious metal against the greenback advanced to 1448.59 from support at 1403.89 in earlier trading, reaching the 50.0% of last downward wave from 1565.32 to 1322.86. The US dollar versus the Japanese Yen slipped from 99.73 to 98.98, moving slightly away from psychological resistance at 100.

Moving on, the common currency was trading in 1.3020/1.2971 tight range yesterday, while earlier today benefited from US dollar weakness and rose up to 1.3062. The Euro was also supported by appointment of Enrico Letta as the new Prime Minister for Italy, reducing borrowing costs for the 10 year debt to 3.95%, a record low since November 2010, however weaker than expected German Ifo Business Sentiment placed a cap on the currency pair at 1.3026. In addition, investors are focused on next Thursday’s ECB meeting with speculation increasing that interest rates might be reduced, following IMF comments for further monetary enhancement in Euro-zone and Weidmann stating that rate might reduce.

Elsewhere, the sterling bounced up to resistance at 1.5334 as the support at 1.5203 maintained its ground ahead of preliminary GDP quarterly release, following downgrade by Fitch. In Australia today is Bank Holiday, therefore we expect moves to be driven by thin trading.