The U.S. Dollar is trading mixed at the midsession after the release of U.S. productivity and inventory reports.
The U.S. Dollar is trading mixed at the midsession after the release of U.S. productivity and inventory reports. Productivity grew in the second quarter because employers squeezed more out of there employees. Inventories fell during the second quarter. An increase in sales helped companies move excess supply, but it doesn’t appear that new orders were placed to replenish the stock.
The GBP USD is erasing some of its recent loss. Today’s move appears to be short-covering after a three-day break and the start of the Fed’s FOMC meeting. Today’s U.S. reports may be helping to pressure the Pound, but overall it looks as if traders are content with keeping this currency in a range.
After a sharp selloff, the EUR USD is posting a modest gain. Profit-taking and position evening ahead of the Fed’s two-day FOMC are contributing to the strength. Trading for the most part has been limited by light volume and volatility.
The hard drop in U.S. equity markets is putting pressure on the USD JPY. Japanese traders fearful of giving back their stock market profits are selling equities and repatriating their money. Today the Bank of Japan announced after its meeting that it doesn’t believe its economic recovery will be very good.
The USD CAD continues to gain upside momentum for both fundamental and technical reasons. Fundamentally the weaker stock market is causing traders to dump higher yielding stocks. Technically last week’s closing price reversal bottom continues to encourage short-covering and fresh buying as traders are increasing bets the U.S. economy will recover before the Canadian economy.
The stock market decline is triggering a sell-off in higher yielding assets such as the AUD USD and NZD USD. For months these two currency pairs have enjoyed a strong rally while the world demanded risk. Now that the markets are shifting away from risk, downside pressure is building on both of these markets.