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Dollar Rises on Consumer Sentiment, Pound Breaks 1.6300

by on November 28, 2013 4:01 am BST
 

 

The dollar rebounded from early losses when the US data for unemployment claims and consumer sentiment came in better than forecasted, which fueled the on-again, off-again speculation for quantitative easing taper from the Federal Reserve.

“The dollar is benefiting from a very small risk of taper in December,” said Omer Esiner, chief strategist at Commonwealth Foreign Exchange Inc. Esiner is skeptical of a December taper, as many are, and that Janet Yellen will continue QE into the first quarter.

Even though the dollar seen gains, the euro seen higher territory after German lawmakers were able to increase wages and spending without raising taxes. The EURJPY seen another four-year high after the yen continues to face selling pressure. The EURJPY reached 138.82 before pulling back slightly. “Euro-yen seems to be the driver of euro-dollar,” noted Ned Rumpletin of Standard Chartered Bank. The eurodollar was able to break 1.36 for a short period of time before paring back gains. The dollar remains elevated in early Asian trade.

The pound broke through the 1.6300 barrier, just shy of the yearly high 1.6379. The “second” estimate of growth expansion matched, not beat, the primary reading of .8 percent. This seems to give pound bulls reason to add 90 pips on the Sterling-dollar for no particular reason. Price action is floating in a well-confirmed supply zone, and momentum is beginning to wane. The GBPUSD fell back below 1.6300.

“It’s consistent with the picture that we already knew, that the U.K. economy is strengthening. The break to the upside for pound versus the dollar was a reflection of it moving above the recent highs and that’s encouraged a squeeze higher,” said Lee Hardman, currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd.