Dollar dips versus yen gains versus euro on global stock-market selloff

Investing.com - The greenback traded mixed against most major currencies on Friday, buoyed by expectations for the Federal Reserve to continue tapering its monthly bond-buying program though lower as investors flocked to the yen amid a stock-market selloff.

U.S. trading on Tuesday,EUR/USD was down 0.11% at 1.3682.

Solid economic indicators out of Europe recently sent the single currency to levels ripe for profit taking on Friday.

The euro zone’s composite output index rose to a 31-month high of 53.2 in January, up from a final reading of 52.1 in December, according to industry data released Thursday, which bolstered the euro.

Panic in global stock markets, the product of weak Chinese data and fears that emerging markets are facing headwinds, sent investors ditching high-yielding currencies on Friday.

A preliminary Chinese HSBC Manufacturing PMI released earlier this week fell to 49.6 for January from 50.5 in December, missing market calls for an uptick to 50.6.

A reading under 50 signifies contraction, and the numbers spooked investors with concerns that emerging-market economies may grow less.

Investors fleeing risk in emerging markets avoided U.S. equities as well and sought safety in the yen over the dollar, though the greenback did see support on Fed expectations.

The Federal Reserve will meet next week to address monetary policy, and markets were expecting monetary authorities to trim USD10 billion from the U.S. central bank's USD75 billion monthly bond-buying program, though the U.S. central bank will likely keep its language on the dovish side.

The greenback was up against the pound, with GBP/USD down 0.81% at 1.6503.

In the U.K. earlier, the British Bankers' Association said mortgage approvals rose by GBP46,500 in December, less than the expected 47,200 increase, after an upwardly revised 45,400 rise the previous months.

The dollar was down against the yen, with USD/JPY down 0.94% at 102.31, and down against the Swiss franc, with USD/CHF down 0.30% at 0.8946.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.27% at 1.1070, AUD/USD down 0.71% at 0.8706 and NZD/USD down 0.65% at 0.8248.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.03% at 80.54.

U.K. CBI industrial order expectations tumble in January, pound falls

Investing.com - U.K. industrial order expectations deteriorated sharply in January, dampening optimism over the country’s economic outlook, industry data showed on Tuesday.

U.K. CBI industrial order expectations plunge to minus 2 in January

In a report, the Confederation of British Industry said its index of industrial order expectations tumbled by 14.0 points to a reading of minus 2.0 this month from December’s reading of 12.0. Analysts had expected the index to decline by 2.0 points to 10.0 in January.

On the index, a reading above 0.0 indicates increasing order volume is expected, below indicates expectations are for lower volume.

Following the release of that data, the pound trimmed gains against the U.S. dollar, with GBP/USD inching up 0.01% to trade at 1.6429, compared to 1.6445 ahead of the data.

Meanwhile, European stock markets remained higher. London’s FTSE 100 tacked on 0.1%, the EURO STOXX 50 added 0.45%, France’s CAC 40 rose 0.25%, while Germany's DAX advanced 0.35%.

USD/CAD: Steady in Thin Trade

The Canadian dollar has steadied as we start the new week, but remains close to the key 1.10 level. Early in the North American session,USD/CAD is trading in the mid-1.09 range. On Friday, US construction and employment data met expectations, but consumer confidence dipped. Monday's trade has been light, as US markets are closed for the Martin Luther King holiday. There are no Canadian releases on Monday either, but it is a busy week north of the border, starting with Canadian Manufacturing Sales on Tuesday.

Weak inflation levels in the US remain a concern, as this is an indication of an underperforming economy. This was underscored by Core CPI, which posted a weak gain of just 0.1%. On Tuesday, the Producer Price Index posted a gain of 0.4%, reversing directions after three consecutive declines. On Wednesday, Chicago Fed President Charles Evans said that the low rate of U.S. inflation is “both puzzling and worrisome,” and enough reason to maintain low interest rates, even if the employment picture continues to brighten.

The Bank of Canada released its quarterly Business Outlook Survey last week, and the report showed that Canadian businesses were more optimistic in Q4 about investment and hiring compared to Q3. At the same time, companies dealing with the domestic market were less confident than those that rely on the global economy, which has shown improvement. Meanwhile, Canadian employment numbers looked awful last week, as Employment Change tumbled to -45.9 thousand, erasing a strong gain of 21.6 thousand a month earlier. This was nowhere near the estimate of 14.4 thousand. The unemployment rate, which had hovered at 6.9% for three straight readings, jumped to 7.2%. The dismal figures came on the heels of weak numbers from Building Permits and the Ivey PMI earlier in January. If Canadian key releases miss their estimates this week, the loonie will likely rise above the key 1.10 line.

USD/CAD for Monday, January 20, 2014

USD/CAD Daily Chart

USD/CAD January 20 at 15:20 GMT

USD/CAD 1.0951 H: 1.0967 L: 1.0930

USD/CAD Technical

S3	S2	S1	R1	R2	R3
1.0783	1.0852	1.0906	1.1000	1.1094	1.1319

USD/CAD has edged lower in Monday trading. The pair dropped to a low of 1.0930 during the Asian session.

• 1.0906 is providing support. This is followed by a support level at 1.0852.
• 1.1000 is the next line of resistance. This line could face pressure if the Canadian dollar continues to weaken. This is followed by 1.1094, which has remained intact since September 2009.
• Current range: 1.0906 to 1.1000

Further levels in both directions:

• Below: 1.0906, 1.0852, 1.0783, 1.0652 and 1.0573
• Above 1.1000, 1.1094, 1.1319 and 1.1496

OANDA's Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions in Monday trading. This is reflected in the pair's movement, as the Canadian dollar has started the week with slight losses. USD/CAD is made up of a majority of short positions, indicating a trader bias towards the Canadian dollar moving to higher ground.

It's a quiet start to the week, as the US markets are closed Monday for a holiday. USD/CAD continues to trade in the mid-1.09 range in the North American session.

New Zealand’s consumer price inflation 0.1% vs. -0.1% forecast

Investing.com - Consumer price inflation in New Zealand rose unexpectedly in the last quarter, official data showed on Monday.

In a report, Statistics New Zealand said that CPI rose to a seasonally adjusted 0.1%, from 0.9% in the preceding quarter .

Analysts had expected CPI to fall -0.1% in the last quarter.