In spite of a lack of European news limiting Euro movement, the common currency began the day heading for a fifth daily advance on the US Dollar.
Investor concern ahead of Janet Yellen’s address to lawmakers (coupled with the expectation that this week’s US retail sales data would disappoint) left the US Dollar weaker against the majority of its most traded peers.
However, during the North American session the ‘Greenback’ erased declines and stabilised against the Euro.
The safe-haven US asset was boosted as new Federal Reserve Chairman Janet Yellen confirmed that she supports the continued ‘measured’ tapering of stimulus.
Yellen also commented that much more work is needed to restore the labour market to pre-crisis strength.
In the opinion of forex strategist Charles St-Arnaud, some of Yellen’s remarks might be on the dovish side, but she clearly favours the tapering policy begun by her predecessor Ben Bernanke.
St-Arnaud asserted; ‘With the weak data we got in recent weeks, some part of the market might’ve thought the Fed would be willing to slow the pace of tapering. But she’s made it clear that’s not the case.’
Meanwhile, the US NFIB small business optimism gauge unexpectedly climbed in January, rising from 93.9 to 94.1 rather than stagnating as forecast.
Less positively, US wholesale inventories advanced by less-than-expected in December, edging up by 0.3 per cent instead of climbing 0.5 per cent.
Separate figures showed that the nation’s wholesale trade sales increased by 0.5 per cent in December, month-on-month, rather than advancing by 0.7 per cent.
Tomorrow EUR/USD movement could occur in response to the Eurozone’s industrial production report.
Industrial output in the region is forecast to decline by 0.3 per cent in December from November.
US mortgage applications figures and the US monthly budget statement will also be of interest, although volatility may be a little restrained before Thursday and the publication of both the European Central Bank’s monthly report and advance US retail sales data.
In other currency news, the Bank of England inflation report may inspire market movement tomorrow.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,British Pound,0.8304 ,
Euro,,New Zealand Dollar,1.6422,