Dollar gains as Obama says no troops bound for Iraq

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Investing.com - The dollar traded largely higher against most major currencies on Friday amid relief buying after President Barack Obama ruled out sending U.S. troops to quell a rebellion in Iraq.

In U.S. trading on Friday, EUR/USD was down 0.13% at 1.3534.

Markets across the globe continued to track a rebellion in Iraq led by a Sunni Islamist group that threatened to take Baghdad after capturing key cities elsewhere in the country.

Investors breathed a sigh of relief, however, after U.S. President Barack Obama said he won't sent troops to Iraq and added oil continues to flow normally out of the country, which boosted the dollar by fueling hopes U.S. support will help the Iraqi government halt the rebellion.

Elsewhere, soft U.S. economic indicators kept the dollar's advance in check.

In a preliminary report, the Thomson Reuters/University of Michigan consumer sentiment index fell to 81.2 this month from 81.9 in May, whose figure was revised up from a previously estimated reading of 81.8. Analysts had expected the index to rise to 83.0 in June.

Also on Friday, official data showed that U.S. producer price inflation fell 0.2% in May, confounding expectations for a 0.1% rise, after a 0.6% increase the previous month.

Core producer price inflation, which excludes food, energy and trade, slipped 0.1% last month, compared to expectations for an increase of 0.1%, after a 0.5% rise in April.

Meanwhile in Europe, the euro found some support on Thursday after data showed that industrial production in the euro zone increased by 0.8% in April, above forecasts for a 0.4% gain. Industrial production in March was revised down to a decline of 0.4% from a previously reported drop of 0.3%.

The dollar was up against the yen, with USD/JPY up 0.32% trading at 102.04 and up against the Swiss franc, with USD/CHF up 0.22% at 0.9004.

At its monthly policy-setting meeting, the Bank of Japan said it will continue to expand the monetary base at a pace of ¥60 trillion to ¥70 trillion per year, which weakened the yen and boosted demand for the dollar.

BoJ Governor Haruhiko Kuroda had said last week that the central bank's easing measures are having the intended effects and are helping the economy.

The greenback was down against the pound, with GBP/USD up 0.23% at 1.6968.

Markets have long been suspecting the Bank of England to raise interest rates before other major central banks, and BoE Governor Carney confirmed those sentiments in a speech he delivered on Thursday.

"There's already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced," Carney said in prepared remarks of his speech.

"It could happen sooner than markets currently expect."

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.03% at 1.0857, AUD/USD down 0.29% at 0.9399 and NZD/USD down 0.25% at 0.8666.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.08% at 80.65.

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This article appears in: Investing , Forex and Currencies

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