Sun, Jan 28, 2007 - Page 10 News List

Positive economic reports boost US dollar against rivals


The US dollar gained ground on Friday in the wake of robust US economic news as durable goods orders remained robust and as new home sales rose more than had been expected last month.

The upbeat economic news gave the US currency a boost amid hopes the world's largest economy could be picking up steam again, raising the possibility of future interest rate hikes.

At 10pm GMT, the euro remained under the US$1.30 mark at US$1.2916 late on Friday, down from US$1.2935 late on Thursday.

The US dollar was meanwhile changing hands against the Japanese yen at ?121.53 late on Friday, up from ?121.15 late on Thursday in New York.

The British pound was quoted at US$1.9595, down from US$1.9645 late on Thursday.

Sterling had spiked as high as US$1.990 on Tuesday, marking its highest level against the dollar since 1992, as traders speculated on future interest rate spreads.

However, the dollar clawed back ground by week's end following Friday's economic news.

"Friday's [economic] numbers offered strong support for the US economy and its representative currency," said John Kicklighter, a currency analyst at Forex Capital Markets.

Orders for US durable goods rose 3.1 percent in December as transportation equipment orders remained robust, the US Commerce Department said earlier on Friday.

The gain was weaker than most Wall Street analysts' forecasts that durable goods orders would rise 3.5 percent in December. Nonetheless, the increase in orders was the strongest since September.

Meanwhile, sales of new US homes rose by more-than-expected in December, but over last year fell by the biggest margin in 16 years, according to a separate government report.

The US Commerce Department said new home sales rose 4.8 percent last month to an annualized clip of 1.120 million, defying most economists who had expected sales to increase to just 1.050 million homes.

However, the government report also showed that sales of newly built homes slumped 17.3 percent last year to 1.061 million homes compared with the prior year's sales pace.

Traders said the yen came under pressure from relatively soft Japanese inflation data, which cast further doubt on the likelihood of a rate hike next month from the Bank of Japan.

Figures showed that Japan's December core CPI rate decelerated to 0.1 percent on an annual basis against expectations of a second consecutive 0.2 percent.

"Today's report from Japan must surely be seen as a further obstacle in the process of monetary normalization," said Neil Mellor, a currency strategist at the Bank of New York.

The US dollar stood at 1.2534 Swiss francs, from SF1.2481 on Thursday.

The greenback gained ground against the new Taiwan dollar on Friday, increasing NT$0.089 to close at NT$32.938.

A total of US$937 million changed hands during the day's trading.

The US currency opened at NT$32.949 and fluctuated between NT$32.760 and NT$32.960.

This story has been viewed 2464 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top