US dollar strengthens against euro, yen

| July 18, 2006 | 0 Comments

The US dollar was stronger on Tuesday as several dollar-positive reports were released. Producer prices for finished products were 4.9 percent higher, indicating that consumer inflation data, due to be released on Wednesday, will also be higher. In addition, inflows into the United States were at $69.6 billion May, enough to cover that month’s trade deficit.

The dollar was up 0.2 percent to $1.2495 in relation to the euro, while it also added 0.2 percent versus the Japanese yen to ¥117.44 and it was up 0.4 percent against the Swiss franc, to SFr1.2529.

The greenback was, however weaker in relation to sterling, dropping 0.4 percent to $1.8264. Sterling was also stronger versus the euro, the yen, and the Australian dollar. The UK currency added 0.6 percent to £0.6842 versus the euro, while it was up 0.7 percent to ¥214.51 against the yen and by the same percentage to A$2.4479 versus the Australian dollar.

Sterling was aided by an increase in consumer inflation, which was up 0.3 percent on a month-on-month basis in June. Along with recent data from the housing sector, analysts saw the higher inflation numbers as tending to favor future rises in UK interest rates.

Elsewhere, the New Zealand dollar was up 0.7 percent to $0.6252 in relation to the US dollar. The latest increase brought the kiwi up 5.3 percent since it hit a low at the end of June. Higher inflation and surging retail sales in New Zealand have some analysts saying that interest rates, now at 7.25 percent, could go higher.

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