FX Roundup: Dollar bounces back despite disappointing data

The dollar shrugged off poor US factory orders data on Tuesday to post decent upticks against major currency crosses in European trading.

According to figures released by the US Commerce Department, factory orders declined 1% in September compared with analysts’ expectations for a 0.9% drop. Meanwhile, August’s figures were revised downwards to show a 2.1% increase compared with the 1.7% rise that was initially reported.

Excluding the transportation sector, factory orders declined 0.6% compared with a downwardly revised 1.1% drop.

At 1635 GMT, the dollar was up 0.35% against the yen exchanging at JPY121.18. In tandem, the pound and euro fell 0.13% and 0.59% to exchange at $1.5397 and $1.0951 respectively. Completing a clean sweep of major crosses, the greenback also rose 0.43% against the Swiss franc exchanging at CHF0.9912.

Meanwhile, the Australian dollar rose 0.34% to change hands against its American counterpart at US$0.7171 as the Reserve Bank of Australia left interest rates on hold.

Kit Juckes, head of forex at Societe Generale, said, “The RBA Statement appeared dovish enough to leave open the possibility of a further cut, but clearly there were shorts in AUD to squeeze and the positive mood has triggered this sharp bounce.

“It's helped AUD/NZD (but not before we were stopped out of course). Overnight tonight we will get New Zealand third quarter employment and wage data, and Australian trade and retail sales.”

Jane Foley, senior FX strategist at Rabobank, said, “Although Tuesday’s RBA policy decision has lent AUD/USD support, we continue to see downside potential. Not only do we expect the RBA to have cut rates again by early 2016, but we are also anticipating a Fed rate hike in December. We maintain the view that AUD/USD can move towards 0.68 on a six month view.”

The New Zealand dollar continued lower still, down 1.02% against the greenback, to change hands at $0.6675. Other commodities linked currencies also traded lower, with the dollar up 0.44% and 0.13% against the Norwegian Krone and Canadian dollar to change hands NOK8.5246 and CAD$1.311 respectively.