NEW YORK (MarketWatch) — Treasury prices pared gains and the dollar cut its losses on Thursday after the Philadelphia Federal Reserve’s report on manufacturing conditions in the region this month improved much than expected. The dollar index /quotes/comstock/11j!i:dxy0 (DXY 77.95, -0.27, -0.35%) , which measures the U.S. unit against a basket of six currencies, traded at 78.088, up from 78.015 before the data but still lower from around 78.240 in late North American trade on Wednesday. The euro /quotes/comstock/21o!x:seurusd (EURUSD 1.3612, +0.0045, +0.3317%) traded at $1.3589, from $1.3605 earlier and $1.3566 late Wednesday.

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There are a number of forces currently competing for control of forex markets: the ebb and flow of risk appetite, Central Bank currency intervention, comparative economic growth differentials, and numerous technical factors. Soon, traders will have to add one more item to their list of must-watch variables: interest rates.

Interest rates around the world remain at record lows. In many cases, they are locked at 0%, unable to drift any lower. With a couple of minor exceptions, none of the major Central Banks have yet raised their benchmark interest rates.

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EUR/GBP

- The EUR/GBP looks to have completed a correction rally, or has it. The decline right now has retraced 61.8% of the rally. Let’s wait for a possible rally attempt to confirm the current bearish continuation signal. The rally should stay below 0.85, preferably topping lower than that like near 0.8480.
– The RSI in the 1H chart broke below 30 to give us a signal of the bearish intention in the short-term. T

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NEW YORK (MarketWatch) — The Federal Reserve Bank of New York bought $7.375 billion in Treasury debt on Friday, part of the Fed’s second round of quantitative easing, and includes purchases made under a previous program to reinvest cash from its maturing mortgage-related holdings back into Treasurys. Dealers offered the central bank $24.073 billion in debt maturing from 2016 to 2018. Since the program began in August, the Fed had bought $397 billion through Wednesday, according to Morgan Stanley. After the buyback, and reports that Egyptian President Hosni Mubarak has resigned, Treasury prices stayed higher.

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