FX Roundup: Positive US data takes attention away from pound

Currency markets remained in mixed mode on Thursday, with none of the major crosses dominating proceedings, but positive US economic data took attention away from the beleaguered pound sterling.

The British currency continued to trade at six-year lows versus the dollar, but ticked marginally higher as 'Brexit' concerns continue to dominate market chatter, with a referendum on the country’s membership of the European Union set for 23 June.

At 1635 GMT, a pound fetched $1.3941 rising a modest 0.10% intraday, while the euro was broadly flat against the British currency at £0.7911.

Alastair McCaig, analyst at IG, said, “Sentiment for the sterling still remains weak however the frenzied selling that we had seen earlier in the week appears to have run its course, at least in the short-term. It is hard to believe with the cloud of negativity that the Brexit uncertainty has created, that we will not be seeing a return of the GBP/USD bears soon enough.”

Pantheon Macroeconomics said, “The expected volatility of sterling futures has risen to levels last seen before the 2015 general election. There are compelling reasons to think, however, that the odds of a Brexit remain relatively slim.”

Meanwhile, US data grabbed the limelight as durable goods orders bounced back in January, but an underlying proxy for trends in investment in the wider economy was still well in the red.

Orders for goods made to last more than three years grew by 4.9% month-on-month in January to reach $237.47bn, according to the US Department of Commerce, following a fall of 4.6% in the month before.

Meanwhile, initial US jobless claims for the week ending on 20 February increased by 10,000 to reach 272,000, according to the Department of Labor. Economists had penciled in a reading of 270,000. A four-week moving average of claims declined by 1,000 to hit 272,000.

Nonetheless, the dollar still had another mixed day as the euro rose 0.15% against the greenback to change hands at $1.1030. But the yen changed hands to a dollar at JPY112.64, with the US currency 0.41% higher. The greenback also rose versus the Swiss franc fetching CHF0.9867, up 0.09%.

Commodity linked currencies had a better session in Europe. The greenback fell 0.81% against the Canadian dollar changing hands at CAD$1.3591. A plethora of other commodity currencies also rose, particularly in Latin America, with the dollar falling 0.29%, 0.58%, 0.78% and 0.46% against the Mexican, Colombian and Chilean pesos and the Brazilian Real respectively.

Finally, the Australian dollar rose 0.07% against the greenback exchanging at US$0.7201, as did the New Zealand dollar by 0.56% exchanging at US$0.6696.