Forex - Dollar gains on Fed comments, consumer sentiment data

Written By Unknown on Sabtu, 29 Juni 2013 | 08.10

Investing.com - Rising U.S. consumer sentiment data and comments from a Federal Reserve governor suggesting monetary stimulus tools may taper in September sent the dollar strengthening against most of its counterparts Friday.

Monetary stimulus tools such as the Fed's monthly USD85 billion bond-buying program weaken the dollar to spur recovery, and talk of their dismantling often firms the greenback.

In U.S. trading on Friday, EUR/USD was down 0.23% at 1.3010.

The Thomson Reuters/University of Michigan consumer sentiment index rose to 84.1 for a final reading in June, up from a 82.7 reading the previous month and also above expectations for a 82.8 reading.

The upbeat numbers came in wake of a report that revealed that the Chicago purchasing managers' index fell to 51.6 this month from 58.7 in May, exceeding expectations for a decline to 56.0.

Any reading over 50 signifies expansion, which left investors feeling at ease in dollar positions Friday.

Elsewhere in the U.S., Federal Reserve Governor Jeremy Stein suggested earlier that asset purchases may begin to taper in September provided the economy improves, which also boosted the dollar.

"The best approach is for the Committee to be clear that in making a decision in, say, September, it will give primary weight to the large stock of news that has accumulated since the inception of the program and will not be unduly influenced by whatever data releases arrive in the few weeks before the meeting — as salient as these releases may appear to be to market participants," Stein said, according to prepared remarks in a speech he gave earlier.

Meanwhile in the eurozone, official data showed that German retail sales rose 0.8% in May, beating expectations for a 0.2% gain after a 0.1% contraction the previous month, though U.S. events served as the market's chief steering current.

The greenback was up against the pound, with GBP/USD trading down 0.38% at 1.5201.

In the U.K., house price inflation rose 0.3% this month, in line with expectations after a 0.4% gain in May.

The dollar was up against the yen, with USD/JPY up 0.94% at 99.28, and flat against the Swiss franc, with USD/CHF trading down 0.01% at 0.9450.

Japan's manufacturing purchasing managers' index rose to 52.3 in June from 51.5 in May, the index's fastest expansion in almost two years.

A separate report showed that industrial production in Japan rose 2% in May, exceeding expectations for a 0.2% rise after a 0.9% increase a month earlier.

In addition, housing starts in Japan jumped 14.5% in May, far more than the expected 6.2% increase after a 5.8% rise the previous month.

Investors, however, opted for the dollar over the yen in wake of U.S. consumer sentiment numbers and Stein's comments.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.27% at 1.0505, AUD/USD down 1.41% at 0.9145 and NZD/USD trading down 0.68% at 0.7742.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.29% at 83.41.

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