Dollar advanced to two-month high on signs recovery gains momentum
Sunday, 13 December 2009
NEW YORK, Dec 12 (Bloomberg): The dollar advanced to a two-month high against the euro as a bigger-than-forecast increase in retail sales and consumer sentiment indicated the US economic recovery may be gaining momentum.
New Zealand's dollar posted its biggest weekly gain in a month against the greenback after Reserve Bank Governor Alan Bollard said he expected to begin raising interest rates in the middle of 2010. Federal Reserve Chairman Ben S Bernanke said this week a "moderate" pace of US expansion is likely. Officials will decide on policy at their December 15-16 meeting.
"We are dollar bulls," said David Forrester, a currency economist at Barclays Plc, in an interview on Bloomberg Television. "Data will continue to surprise on the upside."
The dollar appreciated 1.7 per cent to $1.4615 per euro this week, from $1.4858 on December 4. It touched $1.4586 Friday, the strongest level since October. The dollar decreased 1.6 per cent to 89.10 yen, from 90.56. The euro dropped 3.2 per cent to 130.24 yen, from 134.54.
Sterling fell for a fourth consecutive week, declining 1.3 per cent to $1.6259 on concern the UK government's budget deficit will keep growing as the government spends more money to revive the economy.
Chancellor of the Exchequer Alistair Darling told lawmakers that Britain's budget deficit will be 611 billion pounds ($990 billion) in the next four years, 5 billion pounds more than previously forecast.
The Bank of England left its main rate at a record low 0.5 per cent and maintained its asset-buying program at 200 billion pounds.
The Dollar Index, which the ICE futures exchange uses to track the greenback versus currencies including the euro, yen and pound, increased 0.9 per cent to 76.565 this week, from 75.911 on December 4. It touched 76.726 Friday, the highest level since November 3.
The gauge of the dollar tumbled 5.8 per cent this year as signs of global economic recovery led investors to buy higher- yielding assets with amounts borrowed in the greenback. A target lending rate of virtually zero made the dollar popular for funding such transactions.
The trading pattern shifted on December 4, when an unexpected drop in the US unemployment rate to 10 per cent pushed the Dollar Index up 1.7 per cent. The index increased 0.7 per cent Friday's retail and consumer sentiment reports.
New Zealand's dollar posted its biggest weekly gain in a month against the greenback after Reserve Bank Governor Alan Bollard said he expected to begin raising interest rates in the middle of 2010. Federal Reserve Chairman Ben S Bernanke said this week a "moderate" pace of US expansion is likely. Officials will decide on policy at their December 15-16 meeting.
"We are dollar bulls," said David Forrester, a currency economist at Barclays Plc, in an interview on Bloomberg Television. "Data will continue to surprise on the upside."
The dollar appreciated 1.7 per cent to $1.4615 per euro this week, from $1.4858 on December 4. It touched $1.4586 Friday, the strongest level since October. The dollar decreased 1.6 per cent to 89.10 yen, from 90.56. The euro dropped 3.2 per cent to 130.24 yen, from 134.54.
Sterling fell for a fourth consecutive week, declining 1.3 per cent to $1.6259 on concern the UK government's budget deficit will keep growing as the government spends more money to revive the economy.
Chancellor of the Exchequer Alistair Darling told lawmakers that Britain's budget deficit will be 611 billion pounds ($990 billion) in the next four years, 5 billion pounds more than previously forecast.
The Bank of England left its main rate at a record low 0.5 per cent and maintained its asset-buying program at 200 billion pounds.
The Dollar Index, which the ICE futures exchange uses to track the greenback versus currencies including the euro, yen and pound, increased 0.9 per cent to 76.565 this week, from 75.911 on December 4. It touched 76.726 Friday, the highest level since November 3.
The gauge of the dollar tumbled 5.8 per cent this year as signs of global economic recovery led investors to buy higher- yielding assets with amounts borrowed in the greenback. A target lending rate of virtually zero made the dollar popular for funding such transactions.
The trading pattern shifted on December 4, when an unexpected drop in the US unemployment rate to 10 per cent pushed the Dollar Index up 1.7 per cent. The index increased 0.7 per cent Friday's retail and consumer sentiment reports.