By TraderVox.com
Tradervox (Dublin) – US economy is showing some signs of improvement and reports from the region are causing volatility in the market. The greenback has increased against most of its peers showing signs of a major technical breakout in the coming months. The USDJPY overtook 84.00 level today before retreating to just under it later in the day. US dollar has been strong against the Kiwi and the Aussie since the beginning of the week and the trend continued today in the Asian session.
The New Zealand dollar fell during the day to close at 0.8180 after falling from 0.8232. Commodity currencies had pushed upwards yesterday as investors were positioning themselves for the FOMC decision. However, the currency was pushed to a 7-week low of 0.8061 as the market prepared for a report on US jobless claims, expected to show a decline.
The Australian dollar fell to $1.0423, which is the lowest it has been since Jan. 20 but later rose to $1.0459 at the close of trading in Sydney. The demand for the Aussie was diminished by Chinese Premier Wen Jiabao’s comment indicating that China would keep restrictions on the real estate market.
The decrease in demand for the south pacific dollars came as investors waited for the confirmation of the unemployment insurance payment which is expected to reduce by 5,000 for the week ending March 10. The report is to be release midday on March 15.
According to Mike Jones, a Currency Strategist at Bank of New Zealand, the risk for the two south pacific dollars has always been a change in sentiments toward the US dollar. This change has come upon positive economic reports from the US. The drop in the Aussie has been attributed to US economic recovery and the negative reports from the Chinese property stocks.
However the Kiwi is expected gain against the Aussie as New Zealand’s Performance of Manufacturing Index increased to 57.7 in February. This is the highest reading for the index since April 2010. Investors are expected to play the Aussie/Kiwi pair as opposed to the US dollar pair.
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