Dollar Strengthens Against European Majors
November 21 2014 - 06:26AM
RTTF2
The U.S. dollar advanced against European major counterparts in
European deals on Friday, as positive U.S. data released overnight
indicated that the economy is strong enough to overcome headwinds
of a global slowdown.
While U.S. existing home sales climbed to a 1-year high in
October, the Philadelphia Federal Reserve's regional manufacturing
index jumped to its highest level in over twenty years in
November.
Meanwhile, first-time claims for U.S. unemployment benefits fell
modestly in the week ended November 15th, point to strengthening
labor market conditions.
The U.S. leading indicators rose more than anticipated in the
month of October, with an increase of 0.9 percent. Also, the U.S.
consumer price inflation remained at 1.7 percent on year in
October, beating economists forecast of 1.6 percent growth.
These data reinforced expectations that the U.S. economy is
showing signs of sustained growth, contrasting with weakness in
Europe and Asia.
Signs of strong economic growth also provides ample room for Fed
to hike rates sooner-than-forecast. Market participants currently
expect the Fed to raise rates in September 2015.
The greenback hit 0.9675 against the franc, its strongest since
November 14. Next possible resistance for the greenback-franc pair
is seen around the 0.98 zone.
The greenback that ended Thursday's trading at 1.2538 against
the euro strengthened to a weekly high of 1.2423. On the upside,
1.23 is seen as the greenback's next possible resistance level.
The firm anchoring of inflation expectations is critical under
any circumstances, European Central Bank President Mario Draghi
said.
The inflation situation in the euro area has also become
increasingly challenging, Draghi said at the Frankfurt European
Banking Congress. He observed the risk of too prolonged period of
low inflation becoming embedded in inflation expectations.
The greenback rose to a 2-day high of 1.5625 against the
Sterling, up from yesterday's closing value of 1.5691. Continuation
of the greenback's uptrend may see it challenging resistance around
the 1.55 zone.
British government borrowing in October decreased from a year
ago and was in line with economists' expectations, figures from the
Office for National Statistics showed.
Public sector net borrowing excluding interventions was GBP 7.7
billion in October, down 2.4 percent from GBP 7.9 billion in th
same month last year.
On the flip side, the greenback held steady against the yen,
after falling to a 2-day low of 117.34 at 9:15 pm ET. The pair was
worth 118.18 at yesterday's close.
Japan's finance minister Taro Aso said in a speech that the
country's currency has been weakening too fast over the past
week.
He said that sudden changes, whether up or down, are not
welcome.
Looking ahead, Canada's consumer price index for October is due
in the New York session.
The Bank of England's David Miles speaks at the Festival of
Economics in Bristol at 2:45 pm ET.
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