USD Eases on Geithner

The greenback relinquished some of its previous session’s gains versus the majors, with Treasury Secretary Geithner jawboning the dollar lower. Geithner responded for calls from China for a global currency but suggesting he was open to the idea. With the G-20 meeting in the UK next week, government officials’ verbal intervention will be closely scrutinized as a driver for the currency market.

Economic data released earlier revealed better than expected US reports, including February durable goods orders and new home sales. The core durable goods orders improved by 3.5% in February, beating calls for a decline of 1.5% and reversing the 3.0% decline in January. The headline figure advanced by 3.4%, a steep improvement from January, which posted a decline of 4.5%. Meanwhile, February new home sales increased by 4.7% to 337k units and beating expectations for a decline to 300k units from 309k units a month earlier.

The calendar for Thursday will see weekly jobless claims, Q4 GDP and Q4 PCE. Weekly jobless claims are expected to continue to edge higher, climbing to 650k from 646k a week earlier. Growth in the fourth quarter is forecasted to deteriorate further, contracting by 6.5% and worst than the 6.2% decline previously. Lastly, both core PCE and PCE are seen unchanged from the previous reading, holding steady at 0.8% and -5.0%, respectively.

JPY Slumps

The greenback was little changed in the Thursday session, edging slightly higher against the euro toward the 1.35-level while advancing versus the sterling. The yen was the loser on the session amid sharp gains in the US equity bourses, losing ground across the board. The Dow Jones added onto recent sessions’ gains, up 2.25% while the Nasdaq surged by 3.8%.

The US economy contracted by less than expected in Q4, albeit worse than the initial reading. The report revealed Q4 GDP contracted by 6.3%, slightly better than consensus estimates for a 6.5% decline versus the previous estimate of a 6.2% decline. The core PCE in Q4 was slightly higher at 0.9% compared with 0.8% previously, while headline PCE posted a 4.9% decline versus a 5.0% decline in the initial estimate. Meanwhile, the outlook for the US jobs market remains bleak with weekly jobless claims creeping up further to 652k from 646k a week earlier.

Reports slated for release in the Friday session include February consumption, personal income, PCE and the University of Michigan. Markets expect February consumption to decline to 0.2% from 0.6% in January while personal income is seen declining by 0.1% compared with an increase of 0.4% previously. The University of Michigan consumer sentiment survey final reading is expected to improve to 56.8 in February, up from 56.3 while the current survey is seen declining to 64.1 from 65.5 in January