The dollar fell on weak data

The dollar on Friday fell against major currencies, as a rather disappointing piece of economic data in the U.S. has pushed traders to record profit from an earlier strengthening dollar. "You see that the dollar retreated. I do not think that there were serious reasons to stay in long positions on dollar before the weekend, and now we have for the weak data," said vice president of foreign exchange market "Erste Bank" in New York Joe Frankomano. The significance of the University of Michigan index of consumer confidence in April was 93.2, significantly yielding predictions of economists in 96.5 and lower than the final value of 95.8 in March. Earlier, unexpectedly fell to -0.2% rate of U.S. industrial production, given that analysts had expected growth of +0.3%, while capacity utilization fell slightly by 0.2 to 76.5, the forecast was 76.8. Investors bought the dollar this week, because good data on the U.S. economy fuel expectations that the Federal Reserve will begin raising interest rates sooner than expected. Higher U.S. interest rates increase the return on U.S. assets, increasing their attractiveness to international investors.

"Traders data after closing its unsuccessful long positions against the dollar on the euro, sterling and Australian. But the general mood of the dollar is still positive, albeit slightly cooled, add Frankomano.

At midday in New York, the euro traded around $ 1.1995, which is higher by about 0.16% compared with $ 1.1863 in the environment, which is a minimum since November 2003.

News from Europe that Bundesbank President Ernst Velteke resigned, it is unlikely that led to the Euro move from their seats. Against the yen the dollar traded at around 107.87 yen, down about 0.2% and remain below the monthly peak recorded on Thursday. Traders also attributed the fall of the dollar with trigger stop orders below 108 yen. Against the Swiss franc, the dollar fell by about 0.1% to 1.2940 francs. Sterling rose by 0.2% to $ 1.7958.
Earlier, the dollar started to decline against the euro after growth of the representative of the Federal Reserve warned of the possibility of increasing the interest rate soon, and the subsequent further report showing that U.S. industrial production declined in March.

Richmond Fed President Alfred Broaddus said that he thinks that the Fed will need some time to assess the conditions for increasing rates. Broaddus added that he was not concerned about the risk of rising inflation in the
shortly and that he still sees "significant" weakness of the American economy.

"Broaddus basically said that raising rates is in some perspective, and this provides an incentive for small-scale sales of the dollar," said a trader from the "Societe Generale" in New York, Mike King. Most analysts expect that raising the rates will make U.S. assets more attractive and help to strengthen the dollar. But market expectations of monetary tightening in the near future, which pushed the dollar to the months of peak against the euro earlier this week, is now decreasing.

Forex Magazine
based on Reuters.com