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Forex - Dollar gains as World Bank cuts global growth forecast

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Investing.com - The dollar moved higher against most of its peers on Wednesday after the World Bank cut its global growth forecast for 2013, sparking safe-haven demand for the greenback.

In U.S. trading on Wednesday, EUR/USD was down 0.09% at 1.3293.

The World Bank earlier cut its 2013 global growth forecast to 2.4% from a 3% forecast made in June, adding developing nations will struggle this year, which sent investors going long on the greenback.

The multilateral lending institution said the eurozone economy will contract by 0.1% this year, well below its most recent forecast for growth of 0.7%.

Earlier, Germany's government said that the economy will grow just 0.4% in 2013, down from its previous forecast for 1% growth.

The euro did see support, however, after ECB governing council member Ewald Nowotny said that eurozone's economic situation had stabilized and added that the euro exchange rate was "not a matter of major concern."

Offsetting those comments, however, were those of Jean-Claude Juncker, the head of the euro group of finance ministers, who said the euro's value was "dangerously high" and posed a threat to the recovery in the eurozone.

Elsewhere in the U.S., official data revealed that the country's monthly consumer price index came in flat in December, in line with expectations, after contracting 0.3% in November.

The country's monthly core consumer price index, stripped of volatile food and energy prices, grew 0.1% in December, missing expectations for a gain of 0.2%, which capped the dollar's gains.

A separate report showed that U.S. industrial production rose 0.3% last month, also in line with expectations.

The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.40% at 1.6002.

The World Bank added in its report that the U.K. economy would grow by 1.1% in 2013, well below its June forecast for 1.6% growth.

Elsewhere in the U.K., s political pressure began to build on British Prime Minister David Cameron to renegotiate elements of the country's EU membership ahead of a speech on Friday, in which he will outline plans to change Britain's relationship with Europe.

The dollar continued to slide against the yen after Japanese Economy Minister Akira Amari warned earlier this week that weakening the Japanese currency too much could have adverse effects on the economy, especially by crimping imports.

In afternoon U.S. trading on Wednesday, USD/JPY was down 0.37% at 88.47.

The dollar, meanwhile, was down against the Swiss franc, with USD/CHF trading down 0.05% at 0.9315.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.18% at 0.9860, AUD/USD up 0.01% at 1.0567 and NZD/USD trading up 0.10% at 0.8406.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.10% at 79.84.

On Thursday, the U.S. will produce official data on building permits and housing starts, which together will provide a glimpse into the country's housing and construction health.

The U.S. is also to release the weekly government report on initial jobless claims and data on manufacturing activity in Philadelphia.

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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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