USD Trading Outlook (18-05-2012)

The US dollar (USD) strengthened against a basket of currencies yesterday sentiment in the market was further hurt by weaker than expected economic figures from the US. Against the safe haven Japanese yen (JPY) the greenback dropped to a three-month low at 79.13 from 80.37 after the US Philadelphia Fed Manufacturing Index surprised the markets by showing a disappointing figure of -5.8 while 10 was expected. The negative reading signals an economic contraction adding further on the Federal Reserve’s concerns about the pace of the US economic recovery. Japan’s Finance Minister Jun Azumi said that the Bank of Japan is ready to intervene in order to stop the yen from rising further.