FX round-up: US dollar stronger across the board

Improved risk appetite was evident in the foreign exchange markets, with dollar/yen staging a significant bounce, rising by 0.71% to 109.32.

It was also reflected in euro/dollar, which finished the session lower by 0.95% to 1.1278.

Strength in the US dollar also weighed on the carry crosses, with the Aussie off 0.45% at 0.7650 versus the greenback and the New Zealand dollar drifting down by 0.09% to 0.6919.

The latest batch of economic data out of the States was less than stellar.

US producer prices slipped by 0.1% month-on-month in March (consensus: 0.3%). In parallel, government figures showed that retail sales volumes in the US decreased by 0.3% month-on-month after a flat reading for February (consensus: 0.1%).

However, some analysts cautioned that headline weakness in the data might be misleading.

US retail sales were distorted by the timing of this year’s Easter holidays, Ian Shepherdson, chief US economist at Pantheon Macroeconomics said in a research note sent to clients.

As well, the latest US factory gate prices revealed that core goods prices were no longer falling, he said.

Fedspeak overnight was rather mixed, with the presidents of the regional Fed banks of Dallas and Philadelphia, Robert Kaplan and Patrick Harker, making ‘dovish’ noises even as their peers at the San Francisco and Richmond Fed banks, John Williams and Jeffrey Lacker, respectively, did the opposite.

However, Mr.Lacker did balance his remarks by saying that “a gradual pace of tightening is still appropriate for now”.