LONG the US Dollar was a trade that for much of 2013 was a consensus view, but to many this trade failed despite the backdrop of a stronger US economy and the Fed in the wings to taper.
Aussie Dollar -1.3% today and -2.5% over 2 days as commodity currencies will remain to be sold in this higher growth environment despite their linkage to growth.
With recent signs the U.S. economy is improving the U.S. dollar has moved higher against it counter parts with the exception today with the Canadian dollar.
The Canadian dollar is holding is holding its own against the U.S. dollar ahead of the much anticipated monetary policy statement from the Bank of Canada (BOC). BOC is expected to maintain rates at 1.0%. It’s important to note that the BOC has kept interest rates at 1.0% since September 2010.
U.S. jobless claims dropped by 37k to a five year low of 335k last week keeping the U.S. dollar flat against the Canadian dollar. Further capping the U.S. dollar was caused by a four year high in U.S. housing starts for the month of December – boasting a 12.1% increase compare to expectations of 33%.
Currency traders remain cautious ahead of Federal Reserve Chairman Ben Bernanke’s speech scheduled for 4pm today at the University of Michigan, where he will discuss long-term challenges facing the U.S. economy.
As we started the second U.S. session of the week currency trading remains quite as the U.S. dollar ticks slightly higher against the Canadian dollar.