Dollar holds gains vs. rivals after upbeat data, focus on euro zone

Published 11/09/2012, 10:41 AM
Updated 11/09/2012, 10:42 AM
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Investing.com - The U.S. dollar remained broadly higher against most of its major counterparts on Friday, after the release of strong U.S. consumer sentiment data as euro zone debt concerns continued to dampen risk sentiment.

During U.S. morning trade, the dollar was higher against the euro, with EUR/USD falling 0.25% to 1.2715.

In a preliminary report, the University of Michigan said that its index of consumer sentiment hit a five-year high in November, rising to 84.9 from a reading of 82.6 the previous month.

Analysts had expected the index to rise to 83.0 in November.

But sentiment on the euro remained fragile after Germany's Economy Ministry said that growth was likely to slow in the fourth quarter and the first three months of 2013, while the French central bank said it expected the euro zone's second-largest economy to slip into recession towards the end of 2012.

Investors were also eyeing a Greek parliament vote on Sunday on its 2013 budget. The budget must be passed to unlock a further tranche of international aid.

In addition, official data showed that industrial production in France dropped 2.7% in September, more than the expected 1% decline, after a 1.9% rise the previous month.

In Italy, industrial production tumbled 1.5% in September, compared with expectations for a 1.4% drop, after a 1.7% increase the previous month.

The greenback was also higher against the pound, with GBP/USD shedding 0.39% to 1.5921.

Earlier in the day, official data showed that the U.K. trade deficit narrowed more-than-expected in September, hitting GBP8.4 billion from a deficit of GBP10 billion the previous month.

Analysts had expected the trade deficit to narrow to GBP8.9 billion in September.

Elsewhere, the greenback was steady against the yen, with USD/JPY easing 0.05% to hit 79.43, and higher against the Swiss franc, with USD/CHF rising 0.28% to trade at 0.9484.

In addition, the greenback was steady to higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD inching up 0.01% to 1.0003, AUD/USD slipping 0.21% to 1.0383 and NZD/USD adding 0.03% to hit 0.8150.

The Aussie came under pressure after the Reserve Bank of Australia reduced its 2013 growth outlook to 2.75%, earlier in the day.

But the export-linked currencies found some support after data earlier showed that industrial production in China rose by 9.6% last month, more than the expected 9.4% increase and following a 9.2% rise in September.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.25%, to trade at 81.10.

Overall market sentiment continued to be weighed by concerns over the U.S. fiscal cliff, automatic tax hikes and spending cuts due to come into effect on January 1 unless lawmakers can reach an agreement, which could threaten U.S. and global growth.


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