Dollar firms as US trade data point to economic strength
Sunday, 10 June 2007
NEW YORK, June 9 (AFP): The dollar firmed against the other major currencies yesterday as US trade data showed a surprisingly shrinking deficit that reinforced the notion of stronger growth that could mean higher interest rates.
At 2100 GMT, the euro was trading at 1.3369 dollars from 1.3429 dollars Thursday, and at one point fell to 1.3321 dollars -- the lowest point since April 4.
The dollar rose to 121.74 yen, from 120.91 yen in New York late Thursday.
In late New York trade, the dollar stood at 1.2352 Swiss francs from 1.2238 late Thursday.
The pound was being traded at 1.9698 dollars after 1.9777.
Analysts said the upheaval in world financial markets, including big drops in many stock markets, prompted some investors to reassess their outlook.
"The dollar's strength seemed to originate more from a global swell of risk aversion," said John Kicklighter at Forex Capital Markets.
Others noted the jump in US bond yields reinforced the perception of stronger US economic growth and possibly a hike in interest rates by the Federal Reserve.
Although the US Federal Reserve has so far kept US interest rates unchanged for a year at 5.25 per cent, the central bank has warned that it stands ready to raise rates if inflation pressures mount.
Interest rates are creeping higher, particularly in the eurozone, where the European Central Bank (ECB) lifted borrowing costs this week a quarter point to 4.00 per cent.
In economic news, the US trade deficit dropped 6.2 per cent to 58.5 billion dollars in April as Americans slashed spending on imports, including oil, the Commerce Department said.
It was the steepest decline since October and confounded analysts' consensus forecast of an increase to 63.5 billion dollars.
At 2100 GMT, the euro was trading at 1.3369 dollars from 1.3429 dollars Thursday, and at one point fell to 1.3321 dollars -- the lowest point since April 4.
The dollar rose to 121.74 yen, from 120.91 yen in New York late Thursday.
In late New York trade, the dollar stood at 1.2352 Swiss francs from 1.2238 late Thursday.
The pound was being traded at 1.9698 dollars after 1.9777.
Analysts said the upheaval in world financial markets, including big drops in many stock markets, prompted some investors to reassess their outlook.
"The dollar's strength seemed to originate more from a global swell of risk aversion," said John Kicklighter at Forex Capital Markets.
Others noted the jump in US bond yields reinforced the perception of stronger US economic growth and possibly a hike in interest rates by the Federal Reserve.
Although the US Federal Reserve has so far kept US interest rates unchanged for a year at 5.25 per cent, the central bank has warned that it stands ready to raise rates if inflation pressures mount.
Interest rates are creeping higher, particularly in the eurozone, where the European Central Bank (ECB) lifted borrowing costs this week a quarter point to 4.00 per cent.
In economic news, the US trade deficit dropped 6.2 per cent to 58.5 billion dollars in April as Americans slashed spending on imports, including oil, the Commerce Department said.
It was the steepest decline since October and confounded analysts' consensus forecast of an increase to 63.5 billion dollars.