Forex - Dollar broadly higher vs. rivals as risk appetite crumbles

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Forexpros - The broadly higher U.S. dollar was up against most of its major counterparts on Thursday, after a flurry of disappointing U.S. economic data saw risk aversion sharpen, sparking a massive flight to safety.

During U.S. morning trade, the greenback was up against the euro, with EUR/USD dropping 0.79% to hit 1.4312.

Wall Street investment bank Morgan Stanley cut its outlook for global economic growth for 2012, citing an "insufficient policy response to Europe's sovereign debt crisis, weakened confidence and the prospect of fiscal tightening".

The investment bank added that the U.S. and Europe are "dangerously close to recession."

The downbeat growth outlook prompted Morgan Stanley to forecast a rate cut by the European Central Bank in 2012, reversing previous expectations for a rate hike.

The greenback was also higher against the pound, with GBP/USD shedding 0.47% to hit 1.6468.

The U.K. Office for National Statistics said earlier that retail sales rose by 0.2% in July, below expectations for a 0.3% gain.

Meanwhile, the greenback was down fractionally against the yen, but slightly higher against the Swiss franc, with USD/JPY easing down 0.09% to hit 76.53 and USD/CHF edging up 0.05% to hit 0.7905.

While the yen and Swissie usually strengthen at times when investors reduce exposure to riskier assets, concerns over intervention by officials in both countries weighed on the respective currencies.

Japanese Finance Minister Yoshihiko Noda said earlier that he will continue to "closely watch market moves", while adding that an "intervention is meaningless if not a surprise".

Meanwhile, the Swiss National Bank declined to comment on speculation it was intervening in the currency market by boosting liquidity via the currency forwards market.

Elsewhere, the greenback was higher against the risk-sensitive Australian, New Zealand and Canadian dollars, with AUD/USD tumbling 1.58% to hit 1.0384, NZD/USD dropping 1.21% to hit 0.8273, while USD/CAD jumped 1.19% to hit 0.9923.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.77% to hit 74.37.

Meanwhile, gold futures soared to a fresh record high of USD1,827.85 a troy ounce amid increased safe haven demand.

Earlier Thursday, the Federal Reserve Bank of Philadelphia said earlier that its manufacturing index plunged by 33.9 points to minus 30.7 in August, the lowest level since March 2009. Analysts had expected the index to increase to 3.9 in August from 3.2 in July.

Separately, the U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits in the week ending August 12 rose by 9,000 to a seasonally adjusted 408,000, higher than the expected increase of 400,000.

The previous week's figure was revised up to 399,000 from 395,000.

Meanwhile, the National Association of Realtors said that existing home sales declined by 3.5% to a seasonally adjusted 4.67 million units in July, an eight-month low, confounding expectations for a gain of 2.7% to 4.90 million units.

A separate report showed that the U.S. core consumer price inflation rose 0.2% in July, in line with market expectations, while consumer prices including food and energy costs rose 0.5% last month, above expectations for a 0.2% increase.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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