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Forex - Dollar lower as U.S. data, Spain auction boost risk appetite

Published 12/15/2011, 11:18 AM
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Investing.com - The U.S. dollar was lower against its major counterparts on Thursday, after strong U.S. data and a well received Spanish government bond auction supported demand for riskier assets.

During U.S. morning trade, the dollar was lower against the euro, with EUR/USD rising 0.14% to hit 1.3001.

Earlier in the day, Spain’s Treasury sold EUR6 billion of medium-and-long-term bonds, far surpassing a target of EUR3.5 billion.

The country sold EUR2.5 billion of five-year bonds at an average yield of 4.02%, down sharply from 5.27% at a similar auction last month. Spain also auctioned EUR1.4 billion of 10-year bonds at a yield of 5.54%, compared to 6.97% last month.

Spain's performance contrasted sharply with Italy on Wednesday which saw yields on five year bonds surge to euro-era highs.

But the euro remained under pressure after the European Central Bank’s monthly report said the debt crisis in the region still posed a substantial threat to the economic outlook.

The report came after data showing that manufacturing activity in the euro zone rose unexpectedly in December, but remained in contraction territory for the fourth consecutive month.

A separate report showed that consumer price inflation in the euro zone remained unchanged at an annualized rate of 3% in December, in line with expectations.

The greenback was also lower against the pound, with GBP/USD climbing 0.11% to hit 1.5485.

In the U.K., official data showed that retail sales fell 0.4% in November, but rose 0.7% over the past three months compared to the previous three, the strongest gain since August 2010.

Elsewhere, the greenback was down against the yen and the Swiss franc, with USD/JPY shedding 0.14% to hit 77.96, and USD/CHF tumbling 1.32% to hit 0.9407.

The Swiss franc strengthened after the Swiss National Bank kept its minimum exchange rate target of 1.20 per euro unchanged earlier and reiterated its pledge to defend the level with the "utmost determination."

The central bank warned of a highly uncertain global economic outlook, saying that a further escalation of the debt crisis in the euro zone could not be ruled out. The SNB also kept its key interest rate close to zero.

In addition, official data showed that industrial production in Switzerland declined more-than-expected in the third quarter.

In addition, the greenback was weaker against its Canadian, Australian and New Zealand cousins, with USD/CAD down 0.39% to hit 1.0352, AUD/USD adding 0.10% to hit 0.9919 and NZD/USD rising 0.27% to hit 0.7523.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, slipped 0.25% to hit 81.05.

Also Thursday, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits last week fell to a three-year low of 366,000.

A separate report showed that manufacturing activity in the New York area jumped to a seven-month high.

Meanwhile, official data showed that producer price inflation in the U.S. rose 0.3% in November, broadly in line with expectations.


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