FX round-up: Soft data takes edge off dollar strength

LONDON (ShareCast) - Euro/dollar stabilised itself further on Thursday as investors digested the ECB's policy decisions taken on the previous day and a raft of Fed rate-setters weighed in with their individual views on the current outlook for policy. Significantly, ECB governing council member Peter Praet could be heard reiterating Draghi's stance, from Wednesday, that there are no doubts regarding the potential tapering of QE purchases and it is not being discussed.

However, speaking in the afternoon the IMF's Christine Lagarde said Japan and the Eurozone need to improve the effectiveness of their respective asset purchase programmes.

Stateside, the latest batch of first-tier economic indicators came in somewhat on the soft side.

That saw euro/dollar edge higher by 0.32% to reach 1.07916.

The Federal Reserve bank of Philadelphia's headline manufacturing sector gauge improved to a reading of 7.5 in April from 5 in the prior month (consensus: 6); that was its highest level since December.

Nevertheless, in a research note e-mailed to clients economists at Barclays (LSE: BARC.L - news) wrote: "On balance, the details of this morning's report along with the soft Empire State survey yesterday suggest Northeast manufacturing activity will remain muted in early Q2." In parallel, the Department of Commerce reported that in March US building permits dropped by a much larger than expected 5.7% month-on-month to reach an annualised pace of 1.039m (consensus: 1.018m).

Dollar/yen ended the day off by 0.14% to 118.89 after Bank of Japan governor Haruhiko Kuroda reiterated the economy continues to grow at a moderate trend and will not hesitate to adjust monetary policy if necessary.

Cable ended the session up by 0.17% to 1.4957.