Dollar re-approaches 4-1/2 year peak in risk-off trade

Posted on at - The dollar re-approached four-and-a-half year highs against the other major currencies on Friday, as mostly positive U.S. data continued to support the greenback and comments by European Central Bank President Mario Draghi dented risk sentiment.

Dollar re-approaches 4-1/2 year peak in risk-off tradeDollar remains broadly supported near multi-year highs

USD/JPY hit lows of 117.36 before settling at 117.67, down 0.43% for the day as investors locked in profits on the greenback's recent climb to seven-year highs against the Japanese currency.

The dollar remained supported after the Federal Reserve Bank of Philadelphia said on Thursday that its manufacturing index jumped to a 21-year high of 40.8 this month from 20.7 in October.

Data also showed that U.S. sales of previously owned homes rose to a 13-month high in October.

However, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending November 15 decreased by a less-than-expected 2,000 to 291,000 from the previous week's revised total of 293,000.

The dollar also continued to be underpinned after the minutes of the Federal Reserve's latest meeting indicated that officials believe the economic recovery is strong enough to withstand external threats to growth, but offered little additional clarity about when rates could start to rise.

EUR/USD hit session lows of 1.2448 and was last down 0.72% to 1.2450.

The euro came under pressure after ECB President Mario Draghi reiterated on Friday that the central bank is prepared to act rapidly if low inflation persists.

Draghi also warned about weak growth in the euro zone, saying that no improvements are expected in the coming months.

The ECB head was speaking at the 24th European Banking Congress "Reshaping Europe," in Frankfurt.

The euro also pulled away from Thursday's six-year highs against the yen following Draghi's comments, with EUR/JPY down 1.12% at 146.55.

The pound slipped against the dollar, with GBP/USD down 0.25% to 1.5652, up from lows of 1.5634.

Sterling weakened after the U.K. Office for National Statistic said that public sector net borrowing rose by £7.05 billion in October, after a revised increase of £10.57 billion the previous month.

Analysts had expected public sector net borrowing to rise by £6.90 billion.

USD/CHF was up 0.75% to 0.9655, while EUR/CHF was little changed near 26-month lows of 1.2024, not far from the Swiss National Bank’s exchange rate cap of 1.20 per euro.

The Swiss franc has strengthened against the euro in recent sessions ahead of a vote later this month which could force the SNB to increase its gold reserves, a move which could restrict its ability to cap the value of the franc against the euro.

AUD/USD edged up 0.16% to 0.8634 and NZD/USD held steady at 0.7866, while USD/CAD added 0.13% to trade at 1.1318.

The US dollar index


US Dollar Index

88.39+0.68  (+0.78%)
21/11 GMT - Closed (GMT -8)

Technical Summary

5 mins:Neutral
Hourly:Strong Buy
Daily:Strong Buy
Monthly:Strong Buy

, which tracks the performance of the greenback against a basket of six major currencies, was up 0.46% to 88.11, not far from last week’s more than four-year highs of 88.36.


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