Improved risk sentiment and greenback edged higher - FXStreet

Valeria Bednarik, chief analyst at FXStreet explained that market's sentiment improved this Wednesday, helped by an uptick in China’s economic activity, which cooled off the sell-off in Asian share markets.

Key Quotes:

"The Chinese Caixin non-manufacturing PMI printed 52.2 in March, above the 51.2 from February, bringing the composite PMI to 51.3 from 49.4 in February, indicating that the continued PBoC easing is finally offering some results. The American dollar managed to advance some against the common currency, but once again, investors chose to sell the greenback at better levels, as the EUR/USD fell to 1.1326 before surging to a fresh weekly high of 1.1431, ahead of the release of FOMC Minutes.

The US Central Bank statement reiterated that upcoming moves are data dependant, while also showed that an April rate hike was largely discussed, indicating that the FOMC is prepared to move even without a scheduled press conference. The minutes also showed that policy makers are more concerned over the persistent global risks than over the health of the American economy, as they acknowledged employment remains strong, whilst inflation is starting to rise.

The greenback recovered some ground after the less-than-expected Minutes' dovish tone, which left doors open for a June hike, and sent the EUR/USD pair briefly below the 1.1400 region, but still within its latest range. Despite the pair has traded in quite a limited range ever since the week started, the downward potential seems well limited, as declines towards the 1.1300 region are being quickly reverted."