US dollar strengthens on profit-taking

The US dollar strengthened on Thursday after three days of losses, but the gains were explained by profit taking by most analysts, rather than any real shift in sentiment. The gains came even though the Conference Board’s index of leading economic indicators showed weakening due to rising energy prices.

The greenback added 0.4 percent versus the euro to $1.2321, while it was up 0.3 percent to ¥117.56 in relation to the Japanese yen and it gained 0.7 percent against sterling, to $1.7795. In addition, the US dollar was up 1.3 percent versus both the Australian and New Zealand dollars, to $0.7371 and $0.6261 respectively. The US currency also added 2 percent to $6.06 in relation to the South African rand.

In the UK, meanwhile, sterling was weakened by new data showing that inflation was at its lowest in a year. Consumer prices were up only 1.8 percent in March, lower than its 2 percent rise in February. Core inflation was up 1.3 percent. In light of the new reports, analysts again said that they expect the Bank of England to cut interest rates at least twice before the end of the year.

Sterling was down 0.3 percent in relation to the euro, to £0.6924 and it lost 0.5 percent to ¥209.22 against the yen.

Discuss this in the Finance Markets forums

Story link: US dollar strengthens on profit-taking