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The dollar advanced early Thursday in New York, setting a popular gauge of the greenback’s strength on track for its first gain in five sessions as traders parsed the risk of a military attack in Syria against recent minutes that underscore the Federal Reserve’s intention to slow too-hot economic growth.
At least part of the advance for the U.S. currency was driven by a decline in the euro, which weakened against its rival following disappointing industrial production data for the eurozone.
What are currencies doing?
The ICE U.S. dollar index DXY, +0.38% which measures the buck against six rivals, rose 0.4% to 89.909, set to break a four-session skid lower. The broader WSJ U.S. Dollar Index BUXX, +0.23% was up 0.3% at 83.90.
The euro EURUSD, -0.3962% fell to $1.2311, down from $1.2369 late Wednesday in New York.
Britain’s pound GBPUSD, +0.3597% meanwhile, edged higher to $1.4201 compared with $1.4178 on Wednesday.
The dollar rose against the Japanese yen USDJPY, +0.53% buying ¥107.39 compared with ¥106.79 on Wednesday, reaching its highest level in four sessions.
Elsewhere, the Hong Kong dollar USDHKD, +0.0013% faced the foreign exchange intervention by the Hong Kong Monetary Authority since 2015 to stave off further weakening of the Asian currency versus its U.S. rival, to which it is pegged. One buck last bought 7.8500 Hong Kong dollar, unchanged from Thursday’s level.
Russia’s ruble USDRUB, -0.9699% which has been under pressure amid increasing fears about geopolitical tensions with the West that has whacked its markets across assets, was recovering some more. One dollar last fetched 61.771, compared with 62.450 late Wednesday in New York. The Russian currency had been dented following new U.S. sanctions against Moscow, which has offset benefits from a surge in crude oil to roughly three-year highs that would usually bolster the unit. However, its moves have moderated in recent action after it touches its lowest levels since 2016.
Read: Why the Russian ruble’s 10% drop versus the dollar might not be enough
Check out: President warns Russia to ‘get ready’—hints at U.S. missile strikes on Syria
What is driving the markets?
The U.S. dollar edged higher on Thursday in its first positive run in five session, as the modest haven asset buying that had dominated recent trading days abated. Haven assets attract investors during times of turmoil and uncertainty thanks to their high liquidity.
Still, themes remained broadly similar to earlier in the week when the buck had been lower, and traders waited for any developments in the escalating conflict over Syria. U.S. President Donald Trump on Wednesday signaled a missile attack on Syria wasn’t far off, as a response to a suspected government-sanctioned chemical-weapons attack that killed civilians in Damascus over the weekend. Russia has warned the U.S. not to launch an attack.
U.K. Prime Minister Theresa May on Thursday summoned her cabinet to discuss whether to back military actions proposed by the U.S. May is prepared to take action without asking parliament first, the BBC reported. German Chancellor Angela Merkel said Germany wouldn’t participate in military action against Syria.
The euro declined against most other currencies after industrial production data for the eurozone showed a fall for a third straight month in February. Further adding to euro weakness, Germany’s economics ministry said its country economic upswing “softened a little” at the start of the year. Adding further to the weakness, the minutes from European Central Bank’s last meeting pointed at concerns over the strong euro given the trade-tension heavy environment.
What are analysts saying?
“The currency market remains essentially on hold as it awaits both political and economic developments while the calendar itself is practically empty of any first-tier data,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management, in a note.
“The focus still remains on geopolitics as tension builds over the anticipated bombing of Syria. For now, however, there appears to be no threat of imminent action as [the] U.S. tries to corral a coalition of forces to respond to Syria’s use of poison gas. After yesterday’s twitter threat by President Trump, the newsflow has gone eerily quiet leaving markets at a tense standstill,” he added.
Which data are on ahead?
Jobless claims for the week ended April 7 came in at 233,000, more or less in line with the MarketWatch consensus forecast of 230,000.
The import price index, meanwhile, was unchanged in March, compared with 0.4% increase before.
Check out: MarketWatch’s Economic Calendar
At 5 p.m. Eastern, after the market’s close, Minneapolis Federal Reserve President Neel Kashkari is due to take part in a question-and-answer session with the Associated General Contractors of Minnesota.
Which other assets are in focus
U.S. stocks opened higher on Thursday, with both the Dow Jones Industrial Index DJIA, +1.29% and the S&P 500 SPX, +0.97% in the XX.
Treasury yields edged higher, with the 10-year government bond yield TMUBMUSD10Y, +1.36% rising 3 basis points to 2.812%.