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April 15, 2016

Dollar fails to sustain gains on weak US production figures and step back on crude market

Dollar fails to sustain gains on weak US production figures and step back on crude market

March industrial production in the US fell more than expected, battering the optimism about the health of the US economy, official data showed on Friday. The Fed report showed that in the past month, the volume of industrial production decreased by 0.6% with a seasonal adjustments, more than the expected drop of 0.1%. In February, industrial production fell by 0.6%, the figure was revised down from a preliminary estimate of 0.5%.

Processing industries production decreased 0.3% last month with taking into account seasonal adjustments, missing forecasts for growth of 0.1%, after declining by 0.1% in February, the figure was revised down from the initial estimate of growth at 0,1%. The report also showed that the capacity utilization rate fell to 74.8% in March, compared with 75.3% a month earlier. The February figure was revised down from the original estimate of 76.7%. Analysts had expected a smaller decline to 75.4%.

The EUR/USD was trading at 1.1282, up from 1.1273 in anticipation of the release of the data, the pair GBP/USD was trading at 1.4174, up from 1.4155, while the pair USD/JPY was trading at 108.90, bounced from 108.84 support earlier in the session. USD index, which shows the value of the US dollar against a basket of major currencies, was held at 94.79, down from 94.86 the day before the report. Futures on US stock indexes pointed to a lower Wall Street opening. Futures on the Dow fell 0.10%, futures on the S & P 500 fell by 0.16%, while the Nasdaq 100 futures fell 0.24%.

On the commodities market, gold futures were trading at $ 1230.70 an ounce, compared with $ 1233.00 before the release of the data, while crude oil futures were trading at $ 40.51 per barrel, up from $ 40.38. The greenback weakened in Friday against its major peers due to falling oil prices ahead of a meeting of producer countries in Doha, as well as the weak data on consumer sentiment in the US which have reduced risk appetite, causing investors to buy safe currencies such as the Japanese yen .

The dollar index, which tracks the value of US currency against a basket of six major rivals, unwind gains after the growth over the past two days. The decrease of US currency against the yen on Friday was the largest one-day decline in more than a week. “Perhaps there is some concern about the Doha negotiations”, – said a senior currency strategist at Scotiabank in Toronto Sean Osborne. Producers of oil, led by Saudi Arabia and Russia are scheduled to meet in the Qatari capital on Sunday, April 17 to discuss the freeze of production close to current levels and solve the problem of oversupply on world markets.

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