Forex - Dollar broadly higher as strong U.S. GDP boosts rally

Published 11/23/2010, 10:59 AM
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Investing.com – The U.S. dollar was broadly higher against its major rivals on Tuesday, as safe haven buying and better-that expected U.S. GDP data boosted the greenbacks rally.

During European afternoon trade, the greenback was sharply higher against the euro, with EUR/USD plunging 1.46% to hit 1.3428.

Earlier in the day, German Chancellor Angela Merkel said Ireland's crisis was different to Greece's but just as worrying and the single currency was in an "exceptionally serious" situation.

The greenback was also up against the pound with GBP/USD shedding 0.55% to hit 1.5869. Earlier Tuesday, the chairman of the U.K Financial Services Authority said that U.K. banks exposure to Irish debt was “not worrying”.

Meanwhile, the greenback was down against the yen but up against the Swiss franc, with USD/JPY slipping 0.47% to hit 82.93 and USD/CHF climbing 0.35% to hit 0.9932.

Earlier in the day, media outlets in Seoul reported that North Korean artillery fired dozens of shells onto a South Korean island near the disputed sea border, prompting a return of fire by the South.

Elsewhere the greenback was up against its Canadian, Australian and New Zealand counterparts, with USD/CAD gaining 0.34% to hit 1.0221, AUD/USD plummeting 1.27% to hit 0.9760 and NZD/USD tumbling 0.90% to hit 0.7649.

Earlier Tuesday, official data showed that Canadian consumer price inflation rose more-than-expected in October while CPI, which includes more volatile food and energy costs, rose more-than-expected. Meanwhile, Canadian retail sales rose less-than-expected in September.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, soared 0.95%.

Earlier Tuesday, preliminary data released by the U.S. Bureau of Economic Analysis said gross domestic product increased at a seasonally adjusted annual rate of 2.5% during the third quarter, up from an advanced estimate of 2.0%. Analysts had expected the second estimate of U.S. GDP to reach 2.4% in the third quarter.

Separate data showed that U.S. existing home sales fell less-than-expected in October, while the Richmond manufacturing index rose more-than-expected in November.

Later in the day, the Federal Reserve was to publish the minutes of its November monetary policy meeting.

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