After brief gains on Thursday, the dollar was subjected to renewed selling pressure

The headline US durable goods orders data was stronger than expected with a 4.2% gain

for June from a revised 3.7% advance previously. 

Elsewhere, initial jobless claims rose slightly to 343,000 from 336,000 previously. The dollar failed to sustain an initial advance following the US data even with an increase in US Treasury yields.

Federal Reserve would keep policy on hold at next week’s policy meeting. 

comments will increase uncertainty surrounding Fed tapering in September, although the fact that the Fed is trying to focus on the fact that interest rates will stay very low suggests that the Fed is determined ,

The latest Euro-zone monetary data was weaker than expected with a slowdown in money supply growth strong pressure for the ECB to sanction a more expansionary monetary policy.

consensus expectations. 

stronger release and Sterling was vulnerable to significant profit taking following the release. help sustain stronger growth in the medium term. surrounding the UK outlook which will provide some Sterling protection.

will remain vulnerable to some further selling if there is no net reduction in short positions.

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market overview

The latest US jobless claims data was better than expected with a decline to 334,000 in the latest week from a revised 358,000 previously which maintained underlying confidence in steady employment growth. There was an overall reluctance to sell the US currency aggressively with most players looking to buy on dips given a bullish longer-term outlook on US fundamentals. Similarly, the latest Philadelphia Fed index much stronger than expected with an increase to 19.8 for July from 12.5, the highest reading for two years. A Moody’s move to putting the US AAA rating back to a stable outlook from negative not having a significant impact. Following Fed Chairman Bernanke’s testimony, the consensus was still that the Federal Reserve would look to taper bond purchases later in 2013 and look to complete the programme during 2014. There was no great conviction, however, given that the Fed is continuing to insist that developments will be datadependent. The most likely outcome is that the FOMC will look to taper bond purchases, potentially in September, but if the data is disappointing there will be only a very limited scaling back of quantitative easing which would limit potential dollar support given the amount of tightening priced in. The Euro found support above 1.3050 as markets were again unable to break narrow ranges with technical support levels holding and it pushed back towards 1.3150 during Friday. There will be further underlying stresses surrounding the Euro-zone peripheral economies. The holiday season in Europe will dampen activity and may make it less likely that market conditions will deteriorate in the short term. The German government will also have a strong incentive to help dampen any turbulence ahead of September elections. Nevertheless, there are still extremely important risks surrounding peripheral economies and the banking sector. There is still a serious risk that these tensions will explode during the next few weeks. The Chinese economy will be watched extremely closely in the short term amid growing fears over a sharp slowdown as credit conditions deteriorate. These concerns will tend to keep the Australian dollar under pressure and will also curb overall demand for Asian currencies. In this environment, there wi