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Dollar Eases From Lows; EUR/USD Hits 4-day High

10/20/2017, 9:51:51 AMTrading Strategies
Dollar Eases From Lows; EUR/USD Hits 4-day High

The dollar eased from session lows against a basket of major currencies after better-than-expected economic data on manufacturing and jobs lifted sentiment on the U.S. economy.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.25% to 93.07.

The Philadelphia Fed said Thursday its manufacturing index rose to a reading of 27.9 this month, from 23.8 in September, beating economists forecast of a reading of 22.

The U.S. Department of Labor reported Thursday that initial jobless claims decreased 22,000 to a seasonally adjusted 222,000 for the week ended Oct. 13, beating forecasts of a 4,000 decrease.

That duo of upbeat economic reports eased selling pressure in the greenback which followed a surge in the euro as expectations that the European Central Bank will announce plans to taper monetary stimulus at a policy meeting next week overshadowed geopolitical uncertainty in the region.

Spain's central government said on Thursday it would suspend Catalonia's autonomy and impose direct rule after the Catalonia leader Carles Puigdemont threatened to push forward with a formal declaration of independence if Madrid refused to hold talks.

The euro recovered from an initial sell-off as market participants downplayed the impact of ongoing political unrest in Spain.

“… so far it seems that the crisis is restricted to Catalonia, and even then it doesn’t seem likely to seriously impair even Spain, much less the rest of the EU” said Marshall Gittler, chief strategist at ACLS Global.

EUR/USD added 0.37% to $1.1831 while EUR/GBP gained 0.73% to £0.8991.

GBP/USD fell 0.33% on the back of economic data showing retail sales growth fell in September as subdued wage growth continues to weigh on consumption.

USD/JPY fell 0.34% to Y112.56 while USD/CAD added 0.04% to C$1.2472