NEWS / Foreign Exchange

Dollar looking rangebound as traders await further direction

May 31st - After yesterday??™s run of selling against the dollar in light of a downbeat economic outlook and uncertainty over changes at the Treasury, currency markets have been left somewhat rangebound through the overnight session. One perhaps notable exception has however been USD/JPY, with the Yen finding renewed support off the back of upbeat housing and construction order data, in turn pushing the currency pair towards 112. Obviously yesterday??™s data regarding lacklustre consumer spending is going to continue to hang over the market but messages such as those released overnight underline the fact that the country??™s economic recovery is continuing broadly in the right direction. There??™s another raft of economic data due for release today being the final session of the month although particular attention is likely to be paid to outputs from the US including the Chicago PMI and also the release of the latest FOMC meeting minutes. Any suggestion as to when we??™ll see an end to the ongoing cycle of interest rate hikes from Washington could be sufficient to push the dollar lower still, testing new levels for the month although equally an emerging consensus that the hawkish stance is set to continue is set to initiate another run of greenback buying??¦

Tim Wilbraham and Enis Mehmet