CURRENCIES: Dollar Gets Boost From U.S. Economic Data
By Deborah Levine
The dollar edged higher against the euro and some other major rivals
Tuesday as a string of U.S. economic reports showed lingering stresses on the
consumer and financial sectors as well as some improvement in the outlook.
The dollar index (DXY) rose to 75.171, up from 75.105 ahead of a pair of mid-
morning economic releases and higher than 75.129 late Monday. The gauge measures
the greenback against the euro, the Japanese yen, the British pound, the Swedish
krona, the Canadian dollar and the Swiss franc.
The dollar held gains against the euro after the data, traded nearly flat with
currencies from commodity-rich nations, and remained lower against the yen.
At mid-morning, the Federal Deposit Insurance Corp. said the number of
distressed banks in the U.S. rose to the highest level in 16 years.
At the same time, the Conference Board said that its November sentiment survey
showed consumers slightly more confident about the economic outlook but that
their appraisal of short-term economic prospects glum. The reading beat
economists' expectations.
Earlier, the Commerce Department revised lower its estimate for third-quarter
economic growth to 2.8%, in line with expectations, on downward revisions in
consumer spending and business investment in nonresidential structures, as well
as changes to imports and exports.
The dollar extended losses against the yen and fell toward the lowest levels
of the session in euro trading following the GDP report.
The dollar has tended to rise in recent months when the economic outlook
worsens as investors seek safety and limit trades that involve borrowing the
dollar to buy higher-yielding currencies.
Limiting gains, a report in Europe suggested stimulus efforts outside the U.S.
could come to an end more quickly than parallel programs adopted by Washington.
Holding interest rates near 0% and implementing special programs that
effectively have printed more dollars have weighed on the U.S. unit this year.
The dollar fell to 88.49 yen, down from 89.07 yen in late North American
trading Monday.
The euro traded at $1.4944, less than $1.4999 on Monday.
Supporting the euro, the German Ifo Institute's November business-climate
index gained more than predicted.
Ahead of the New York trading session, the dollar had gained against
commodities currencies after China's banking regulator warned the nation's
lenders must strictly comply with capital requirements or face sanctions,
raising concerns that months of rapid loan increases will end and slow growth in
China, which has been viewed engine for the global growth rebound.
Still to come are minutes from the Federal Reserve's Open Market Committee's
monetary-policy meeting earlier this month.
"The rhetoric in the wake of the latest meeting was more dovish than that
following the September meeting," noted T.J. Marta, chief market strategist at
Marta on the Markets.
Also of interest will be any discussion of extending the mortgage-security
purchase program beyond its expected expiration in March -- something James
Bullard, president of the Federal Reserve Bank of St. Louis, alluded to over the
weekend.
The FOMC minutes are scheduled to be released at 2 p.m. Eastern time.
(END) Dow Jones Newswires
11-24-091130ET
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