Dollar Gets Breather After Euro And Yen Retreat From Recent Highs

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The fall in the U.S. Dollar (CURRENCY:USD) came to a pause on Wednesday after market sentiment shifted to European surveys and the U.S. employment data to be released later today. Both Euro and Yen erased their gains from the earlier trading sessions, giving respite to the weakening dollar.

Measures to contain currency appreciation

During Asian trade, EUR/USD (EURUSD) retreated to 1.1488, down by 0.08% while GBP/USD (GBPUSD) fell from its 12-week highs to 1.4492, shedding 0.29%. The market is abuzz with speculations that the European Central Bank and the Bank of Japan could implement aggressive policy action to arrest the currency appreciation. At the same time, San Francisco Federal Reserve President John Williams’ positive tone of a possible June rate hike has revived optimism for the U.S. dollar.

Stocks and oil take a beating

On the equities front, Asian markets continued to slide for yet another day today. All of the major Asian indices were unsettled over weak Chinese manufacturing data coupled with a trimmed growth outlook for Europe. Taiwan’s TSEC 50 Index shed the most, closing 1.31% lower at 8,185.47 for the day.

Meanwhile, the European bourses too were reflecting the same mood with the region’s equities broadly trading lower. As per Richard Griffiths, associate director at Berkeley Futures, the deflationary pressures will make it hard for markets to make headway from here.

Oil prices pared their early day gains with benchmark prices hovering near $44 per barrel levels. U.S. oil drillers trimmed rigs for the sixth straight week to the lowest level since November 2009 during the last week. However, it is believed that the cut down in rig counts has bottomed out, and U.S. producers will start increasing shale production soon. Brent Crude traded at $44.88, down by 0.20% while West Texas Intermediate lost 0.07% to $43.62 during early European trade.

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