Dollar strengthens against other currencies

April 03, 2013 | 09:11
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The dollar on Tuesday gained against other currencies, propelled by solid economic data at home and weak economic reports overseas.


US dollar

NEW YORK: The dollar on Tuesday gained against other currencies, propelled by solid economic data at home and weak economic reports overseas.

The euro was priced at $1.2813 around 2100 GMT, down from $1.2847 at the same time on Monday.

The dollar was trading at 93.39 yen, up from 93.27 yen late Monday, while the euro fell to 119.70 yen, down from 119.82 yen.

The dollar's gains came as a US Commerce Department report showed new orders for manufactured goods rose 3.0 per cent in February, topping expectations of a 2.6 per cent increase.

The better-than-expected data, coupled with robust US auto sales, helped propel the Dow Industrial Average and S&P 500 stock indices to new historic highs.

By contrast, the outlook in Europe continued to drag. The Markit Eurozone Manufacturing Purchasing Managers Index fell to 46.8 points in March, showing further contraction in the sector from the already weak 47.9 posted in February.

Even more dramatic, Eurostat estimated unemployment in the 17-nation eurozone at a record 12 per cent. EU Employment Commissioner Laszlo Andor called the figures "unacceptably high" and said they are "a tragedy for Europe."

Christopher Vecchio, currency analyst at DailyFX, said in spite of the weak data in Europe, the European Central Bank was unlikely to lower interest rates when it meets Thursday.

"As the economic divergence between the eurozone and the United States grows midyear, the ECB will be more open to a rate cut, just not now," Vecchio said.

The dollar gained against the yen as markets anticipated doveish policies from new officials at the Bank of Japan.

There was speculation the bank may "adopt an unlimited quantitative easing program prior to 2014, while there's bets that the BoJ will also broaden the scope of its asset purchase program in an effort to steer the economy out of recession," said David Song, currency analyst at DailyFX.

The dollar gained on the British pound thanks to a series of weak data points in the Britain, including a low manufacturing index, low mortgage approvals and a decline in lending, according to Kathy Lien of BK Asset Management.

The British pound bought $1.5101, down from $1.5232 late Monday.

The dollar rose to 0.9489 Swiss franc from 0.9466 franc.

AFP

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