Greenback Strengthens on Reports of Lowering Asset Purchase Facility - 17.5.2013

The US dollar index recovered from yesterday low at 83.41 and is currently moving towards its 15th of May high at 84.05. The greenback was strengthened as the president of the FED Bank of San Francisco, Williams, said that the FED may withdraw partially from its buying pace of $85 bln bond per month in the summer since jobs sector has improved substantially and economy is steadily recovering. Nonetheless, the currency pair was weighed by more than expected Jobless Claims of 360K the previous week, up from 328k two weeks ago, a 9.76% increase.

Against the Japanese Yen, the US dollar is closing in to more than 4 ½-year high at 102.75 with the Yen yesterday slightly improving on stronger than expected GDP. The currency pair could move above hurdle at 102.75 as expectations are growing for FED to lessen asset purchases while BOJ has recently followed enhanced monetary steps. The precious metal on the other hand dropped again below 1400 after approximately a month, as the US dollar strengthens, also amid lower inflation pressures globally than what was expected with central banks recently adopting softer policies.

The Australian dollar against the greenback is falling heavily this week, prices penetrated parity after fluctuating around that on Monday and Tuesday and dropped early today to floor at 0.9726. The currency pair is getting heavier as the Gold and Iron ore prices, that represent around the 24% of its export industries, are in bear market. Lastly, the Euro managed to hold above the $1.2843 yesterday while other currencies were losing against greenback, with annual CPI at 1.2% in April as expected.