US dollar weaker despite data

| April 26, 2006 | 0 Comments

Strong new economic data in the United States on Wednesday did not help the dollar in its slide against the euro. The dollar was weaker not only in relation to the shared currency, but versus the Japanese yen and sterling as well.

Among the new data reported on the day was a hike in durable goods orders of 6.1 percent in March, when only a 1.8 percent increase had been anticipated. Aircraft orders played a big role in the size of the increase, but even without that component the core reading was up 3 percent. In addition, new home sales were up in March, giving lie to the idea that the housing market was beginning to slow down. Another aspect of the dollars weakness, according to some analysts, was investor hesitation to move ahead of the day’s scheduled testimony before Congress by Federal Reserve Chairman Ben Bernanke.

At any rate, the dollar dropped 0.3 percent in relation to the euro, to $1.2462, while it dropped a fraction to ¥114.66 versus the yen and to $1.7893 against sterling.

Sterling, however, was lower in relation to the euro, dropping 0.2 percent to £0.6965.

Elsewhere, the Australian dollar was up 1.1 percent to $0.7537 versus the greenback as consumer prices down under were up 3 percent in the first quarter from a year earlier, spurring talk of more tightening of monetary policy. The Canadian dollar also gained strength versus the US dollar, adding 0.3 percent to C$1.1273 on data showing labor productivity in Canada up by 2.2 percent last year.

In Asia, the Chinese renminbi was slightly weaker versus the US dollar at Rmb8.0175 and the South Korean won was also slightly down in relation to the greenback to Won946.2 to the dollar. These declines were said by some analysts to have to do with Asian resistance to G7 calls for more flexibility in Asian currencies.

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