FX round-up: Dollar pushes higher despite Fed remarks

The US dollar index reached a one-month peak on Tuesday on the back of stronger than expected data on US durable goods orders, house prices and new home sales.

No less relevant, in parallel the greenback was to be seen near an eight-year high versus the Japanese yen.

By the end of trading dollar/yen had risen 1.19% to 123.00.

Euro/dollar fell 0.86% to reach 1.0884 surrendering technical support at 1.1066.

Cable retreated 0.52% to 1.5394, with technical analysts pointing out the loss of support at 1.5447. The next key levels of support come in at 1.5393 followed by 15380.

Of interest, on the basis of last week’s flows Bill Hubard, chief economist at Bankor, pointed out how investors – including hedge funds and real money accounts – were selling the Japanese yen, Australian dollar and Latin American currencies.

“These are the FX pairs most likely to weaken under a strong US recovery coupled with higher yields,” Hubard added.

That came as Citigroup reported strong US dollar buying from corporates and leveraged funds over the previous week.

All of the above came despite remarks out of Fed vice president Stanley Fischer to the effect that the US central bank could slow the pace of tightening “should foreign economic growth prove weaker than expected”.