27 May AtoZForex, Lagos — Volatility peaked up in the market yesterday with the dollar hitting a new one month high against a basket of major currencies as banks resumed from and extended weekend holiday to trade off the effect of stronger-than-expected underlying U.S. inflation.
The US Core Durable Goods Orders m/m showed the change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items at 0.5%, inline with economists’ expectations. The good result adds to growing optimism that the US economy is finally waking up from its slow start to the year as the core durable goods order came at its highest since Sept 2014. Other reports support this notion as the housing market is gaining traction and consumers are feeling a little more confident. Chief U.S. economist at JPMorgan Chase & Co. in New York Michael Feroli even opines that: “The worst is probably behind us,” “It’s not a vigorous rebound, but it is getting better.” This added to boost the strengthening dollar as the currency closed strong against its major pairs as the US economic data looking upbeat and Stocks dipped the most in three weeks.
Consumer Confidence in the US unexpectedly increased this month, coming at 95.4, picking up from a four-month low as Americans grew more positive about the economy and employment opportunities. Another sign of the economy’s pickup after a bad weather period is the rising home sales. New homes purchases in the U.S. rose beat forecast to come at 95.4, a sign this part of the market is picking up traction during the busiest selling period of the year.
It is day one of the G7 meetings. As the world economy ranges between strength and weakness from different regions, the finance ministers from the world’s largest developed economies (Canada, Italy, France, Germany, Japan, the UK, and the US) will meet in Germany. A priority on the list would be the Greece situation. The country’s scenario is heating up as it is yet to pull through a deal with its Eurozone creditors. How to help the area regain balance and avoid contagion of the Greece situation will be high on the agenda.
The Bank of Canada Rate Statement will be released today during which the Overnight Rate will be announced. It is expected to remain at 0.75%. Governor Stephen Poloz remains sanguine about the weak Canadian dollar will serve to boast the economy’s export-led recovery. The USDCAD has shown renewed strength in the past days and is expected to continue strong on the back of the strengthening dollar and weaker loonie.