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Positive economic news shuns dollar

USD - United States Dollar

The US dollar took a hit this morning after the US took one step closer to passing its $1.9 trillion stimulus package and the jobs report was rosier than expected.

Demand for the dollar fell as positive economic news rippled through markets. The price of oil rose and a fall in US gasoline inventories offered a signal of recovering consumption. Commodity demand also increased.

The US Dollar Index, which represents a basket of currencies valued against the dollar, was down nearly half a percent. It’s the lowest the index has been since March 4.

Key Movers

Eurozone economic data has been mixed and there could be contraction in this first quarter. The European Central Bank kept policy steady as widely expected, but it said the pace of emergency bond purchases will be significantly higher over the next quarter.

GBP doesn't have a whole lot more to play for this week and will probably take its direction from news with other currencies. Comments by the Governor of the Bank of England at the start of the week buoyed the currency, after the market perceived a reducing in the probability that the Bank of England will ever send interest rates into negative territory. In fact, as inflation picks up, quite the contrary maybe seen in the coming months and years. GBPUSD has crawled over the 1.39 handle, with 1.40 now in its sights again. The last two weeks have seen an almost 5 cent swing in the currency pair, suggesting that volatility is still rife, and many risks are still in play.

The Australian dollar edged marginally higher through trade on Wednesday creeping nearer towards 0.7750 supported by a softer USD and dip in treasury yields. Having touched intraday lows at 0.7670 toward the end of the domestic trading session, the AUD trended higher overnight buoyed by a modest decline in US treasury yields and a softer than anticipated US CPI print. Topside gains were capped as domestic rates shifted lower amid comments from RBA governor Philip Lowe. Lowe affirmed the bank's commitment to accommodative monetary policy doubling down on his dovish missive. Having touched highs at 0.7740 the AUD opens marginally lower buying 0.7735 US cents.

Expected Ranges

EUR/USD: 1.189 - 1.196 ▼

GBP/USD: 1.389 - 1.397 ▼

AUD/USD: 0.771 - 0.778 ▼

USD/CAD: 1.256 - 1.265 ▼