FX Roundup: Dollar sheds froth against major crosses

The dollar lost momentum on Wednesday after inventories in the US suffered an unexpected decline in October.

According to the Commerce Department, inventories declined 0.1% compared with analysts’ expectations for a 0.1% gain.

September’s advance was revised down to show a 0.2% increase compared with an initial estimate of a 0.5% rise. Inventories of durable goods, such as autos and machinery, declined 0.1% compared with a 0.6% drop in September, while inventories of non-durable goods fell 0.1% after a 1.5% gain in the previous month.

Meanwhile, wholesales were flat in October, following a 0.5% gain in September and, as a result, the inventory-to-sales ratio held steady at 1.31 in October.

At 1657 GMT, the dollar fell against the yen by 0.87% changing hands at JPY121.86. Concurrently, the pound rose 1.07% against the dollar exchanging at $1.5168, while the euro rose 0.86% to change hands at $1.0986, inching away from parity against the greenback.

Continuing with major crosses, the greenback fell 0.59% against the Swiss franc exchanging at CHF0.9865, slipping further below parity in the dollar’s favour during late European trading. Meanwhile, the pound sterling rose against the euro fetching €1.3809 up 0.20%.

Elsewhere, the dollar had a mixed day against selected commodity-linked currencies; down 0.94% against the Norwegian Krone changing hands at NOK8.7072, but up 0.09% and 0.22% against the Canadian dollar and Mexican peso, changing hands at CAD$1.3597 and MXN17.0594.

Finally, the Australian dollar fell further against its US counterpart by 0.12% changing hands at US$0.7206, while the New Zealand dollar fell 0.26% changing hands at US$0.6630.

Kit Juckes, head of forex at Societe Generale, said, "Commodity markets are quiet even as the press is dominated by their weakness. And there's a dearth of news to drive direction. Such as it is, Chinese CPI inflation picked up to 1.5% from 1.3% last month, though PPI remains at -5.9% year-on-year.

"The main event overnight (apart from the lack of a further fall in oil prices) was the highest PBoC fix for USD/CNY since 2011 at 6.414. USD/CNY is at 6.49, barely higher than yesterday and markets seem unbothered but even so, we expect Chinese forex policy be one of 2016s biggest market drivers. And we don't see much reason for cheer here for Asian currencies."