US Dollar regains lost ground


The US Dollar regained some of the lost ground of late last week as currency traders took a more cautious view over the prospects for any rise in Japanese interest rates, and some better than expected US January Factory Orders data gave a nudge towards confirming that the Federal Reserve will raise rates at its next meeting. Official figures showed US factory orders fell by 4.5 pct in January. Though this was the biggest drop since July 2000 it came in well above analysts' expectations for a fall of 5.3 pct and came largely as a result of a decline in transportation orders which are typically more volatile. Still one eye will be kept on Central Bank actions in Canada tomorrow, Japan on Wednesday and the UK on Thursday. We also have US Trade data and US Employment statistics to look forward to on Friday.
The US Dollar made steady gains against the Euro, after Fx traders had managed to take the European currency as high 1.2095 in late Asian trading, taking it as low as 1.1990 before recovering slightly to 1.2020 after European currency traders went home.

The British Pound had a 160 pip range for the day. Late Asian trading saw stops hit off above 1.7600 to take cable up to 1.7625. During the European session traders were forced to abandon long sterling positions as forex traders took the British Pound as low as 1.7465 taking out some stops just under 1.7500. In North American trading Cable had recovered to 1.7520. A move back down to support at 1.7440 should not be ruled out.
The Swiss Franc slipped to 1.3010 after an Asian High for the Swissie of 1.2890. It closed the day at around 1.2980. A break above 1.3025 would see a quick 100 pip move to resistance to 1.3125.

The Japanese Yen started to weaken early in the Asian trading and continued through the European session got to a low of 117.70 against the US Dollar. 118.40 would be the next area of resistance which the US Dollar bulls would be aiming for.