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Dollar Index Reaches Lowest Level Since June 20; Commodity Block Pops Higher

Dollar Index Reaches Lowest Level Since June 20; Commodity Block Pops Higher

2013-08-08 16:39:00
Kevin Jin,
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THE TAKEAWAY: Bank of Japan maintains monetary policy while providing optimistic assessment > Chinese imports are strongly higher y/y during July > US Initial Jobless Claims slightly beat estimates

The USD avalanche continues as the Dollar Index is lower for the fifth straight day, reaching the lowest level since June 20. The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) falls -57 (-0.53%) to $10657 at the time of writing.

Turning to economic data, Chinese imports increased +10.9% y/y during July, far higher than the +1.0% Bloomberg News survey consensus. Chinese exports were also higher by +5.1% y/y during July, greater than the +2.0% Bloomberg News survey expectation. The large gain in imports caused the trade balance to be lower than expected ($17.82B July actual; $26.90B Bloomberg News survey expected). Increasing imports theoretically points to strengthening Chinese demand. Recall the Chinese government has been attempting to transition to a more consumption based economy.

Also in Asia, the Bank of Japan maintained its monetary policy. BoJ Governor Kuroda stated that “the economy is starting to recover moderately.” Kuroda also said, “On the question of whether efforts to defeat deflation and increases in the consumption tax rate can go together, I believe that they can.” Lastly, Kuroda downplayed recent Chinese data, claiming that the Chinese economy is “relatively stable.”

In the US, Initial Jobless Claims came in slightly better than anticipated: 333K actual; 335K Bloomberg News survey expected. The four-week moving average of Initial Jobless Claims is at its lowest level since November 2007. Read more here.

AUDUSD 15-minute Chart: August 8, 2013

Dollar_Index_Reaches_Lowest_Level_Since_June_20_Commodity_Block_Pops_Higher_body_Picture_4.png, Dollar Index Reaches Lowest Level Since June 20; Commodity Block Pops Higher

Charts Created using Marketscopeprepared by Kevin Jin

The AUDUSD is the strongest performing major FX pair today, up +1.39% at the time of writing. The gains continued through all three trading session and broke past $0.9100 early in New York trading. This AUDUSD is higher for the fourth straight day and is at its highest level since July 30.

GBPUSD 15-minute Chart: August 8, 2013

Dollar_Index_Reaches_Lowest_Level_Since_June_20_Commodity_Block_Pops_Higher_body_Picture_3.png, Dollar Index Reaches Lowest Level Since June 20; Commodity Block Pops Higher

Charts Created using Marketscopeprepared by Kevin Jin

The GBPUSD is moderately stronger by +0.42% at the time of writing. The pair ran strong early in New York trading, reaching an intraday high of $1.5573. This is the highest level since June 19.

EURUSD 15-minute Chart: August 8, 2013

Dollar_Index_Reaches_Lowest_Level_Since_June_20_Commodity_Block_Pops_Higher_body_Picture_2.png, Dollar Index Reaches Lowest Level Since June 20; Commodity Block Pops Higher

Charts Created using Marketscopeprepared by Kevin Jin

The EURUSD is also moderately higher by +0.43% at the time of writing. The pair traded similarly to the cable, with the EURUSD also displaying strong gains early in New York trading. The EURUSD hit $1.3399 towards London Close, the highest level since June 19.

USDJPY 15-minute Chart: August 8, 2013

Dollar_Index_Reaches_Lowest_Level_Since_June_20_Commodity_Block_Pops_Higher_body_Picture_1.png, Dollar Index Reaches Lowest Level Since June 20; Commodity Block Pops Higher

Charts Created using Marketscopeprepared by Kevin Jin

The USDJPY is mostly unchanged at -0.16% at the time of writing. The pair attempted to rally past ¥96.80 in Asian trading but was denied twice before reaching significantly beyond that level. The USDJPY is down for five straight days and is at its lowest level since June 19.

--- Written by Kevin Jin, DailyFX Research

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