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Forex - Dollar index pares gains but remains supported

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Investing.com - The dollar pared gains against other major currencies on Wednesday, but it remained broadly supported by a string of upbeat U.S. data and by comments by Federal Reserve Chair Janet Yellen suggesting a near-term rate hike.

EUR/USD was little changed at 1.0570, after falling to a five-week low of 1.0522 earlier in the session.

The dollar was boosted after the U.S. Commerce Department said consumer prices increased by 0.6% last month, compared to forecasts for a 0.3% rise. Year-over-year, consumer prices climbed 2.5% in January.

Core CPI, which exclude food and energy costs, increased by 0.3%, above expectations for 0.2%.

A separate report showed that U.S. retail sales rose 0.4% in January,beating expectations for a 0.1% gain.

Core retail sales, which exclude automobile sales, increased by 0.8% in January, compared to forecasts for an advance of 0.4%.

In addition, the Federal Reserve Bank of New York said its Empire State manufacturing activity index rose to 18.70 in February from 6.50 the previous month, beating expectations for an uptick to 7.00.

On a less positive note, the Federal Reserve said industrial production dropped 0.3% in January, confounding expectations for a 0.1% rise.

The greenback had already strengthened broadly after Ms. Yellen told the U.S. Senate Banking Committee on Tuesday that waiting too long to raise interest rates would be "unwise," given the rise in inflation and economic growth.

Meanwhile, the single currency remained under pressure amid concerns over Greece's bailout negotiations and the possibility of a Brexit or Trump-style shock result in France's upcoming presidential election.

Elsewhere, GBP/USD was down 0.20% at 1.2441, off session lows of 1.2384.

The Office for National Statistics earlier reported that the U.K. unemployment rate remained steady at an 11-year low of 4.8% in the three months to December.

The number of people claiming unemployment benefits fell by 42,400 to 787,400 in January compared with a revised fall of 20,500 in December.

The ONS also said earnings excluding bonuses rose by 2.6% in the last quarter, down from 2.7% a month ago. Including bonuses, earnings also rose by 2.6%, down from 2.8%.

USD/JPY gained 0.30% to 114.61, while USD/CHF edged up 0.15% to trade at 1.0077.

The Australian and New Zealand dollars erased losses, with AUD/USD up 0.18% at 0.7677 and with NZD/USD adding 0.10% to 0.7175.

Meanwhile, USD/CAD edged 0.16% higher to trade at 1.3096.

Statistics Canada reported on Wednesday that manufacturing sales rose 2.3% in December, exceeding expectations for an uptick of 0.2%. Manufacturing sales gained 2.3% in November, whose figure was revised from a previously estimated 1.5% rise.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.15% at 101.35, off a one-month high of 101.75 hit earlier in the session.

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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.

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