Safe-haven dollar gains on weak consumer reading
Sunday, 16 August 2009
NEW YORK, Aug 15 (AFP): The dollar surged yesterday as an unexpectedly weak reading on US consumer sentiment raised a red flag on the recovery outlook for the world's biggest economy, driving investors to the safe-haven unit.
At 2100 GMT, the euro fetched 1.4201 dollars, down from 1.4287 dollars in New York late Thursday.
Against the Japanese unit, the dollar fell to 94.84 yen from 95.36 yen.
In late New York trading, the dollar jumped to 1.0714 Swiss francs from 1.0697 late Thursday.
The pound was at 1.6540 dollars, down from 1.6583.
The euro, which had held steady in morning trade, slid after the University of Michigan reported its consumer sentiment index dipped to a preliminary 63.2 from 66.0 in August, confounding most analysts who had expected it to rise to 69.0.
"The much weaker-than-expected Michigan confidence data has set the tone for the day, with the markets opting to exit their higher-yielding investments in favor of the safer lure of the USD and yen," said Joel Kruger of Forex Capital Markets.
Coming in the wake of an unexpected 0.1 per cent drop in retail sales in July reported Thursday, the weak consumer sentiment reading lent support to a weak outlook for consumer spending, the main driver of US economic activity.
Brian Bethune, chief US financial economist at IHS Global Insight said the report was "a sober reminder of how much pressure households are under."
US consumer inflation data underscored the slack demand.
The Labor Department reported consumer prices held unchanged in July from June, in line with expectations, leaving a year- over-year 2.1-per cent drop that was the steepest since 1950 due to an unfavorable comparison with pre- global meltdown conditions.
At 2100 GMT, the euro fetched 1.4201 dollars, down from 1.4287 dollars in New York late Thursday.
Against the Japanese unit, the dollar fell to 94.84 yen from 95.36 yen.
In late New York trading, the dollar jumped to 1.0714 Swiss francs from 1.0697 late Thursday.
The pound was at 1.6540 dollars, down from 1.6583.
The euro, which had held steady in morning trade, slid after the University of Michigan reported its consumer sentiment index dipped to a preliminary 63.2 from 66.0 in August, confounding most analysts who had expected it to rise to 69.0.
"The much weaker-than-expected Michigan confidence data has set the tone for the day, with the markets opting to exit their higher-yielding investments in favor of the safer lure of the USD and yen," said Joel Kruger of Forex Capital Markets.
Coming in the wake of an unexpected 0.1 per cent drop in retail sales in July reported Thursday, the weak consumer sentiment reading lent support to a weak outlook for consumer spending, the main driver of US economic activity.
Brian Bethune, chief US financial economist at IHS Global Insight said the report was "a sober reminder of how much pressure households are under."
US consumer inflation data underscored the slack demand.
The Labor Department reported consumer prices held unchanged in July from June, in line with expectations, leaving a year- over-year 2.1-per cent drop that was the steepest since 1950 due to an unfavorable comparison with pre- global meltdown conditions.