The US dollar climbed against the euro today as positive macroeconomic data supported the case for smaller monetary stimulus from the central bank. The currency retreated against the Great Britain pound and the Japanese yen despite supportive fundamentals.
The US housing market was strongest almost since 2008 as housing starts were at the seasonally adjusted annual rate of 1.00 million and building permits were at 0.99 million in December. Industrial production expanded by 0.3 percent last month. As a bit of negative news, the preliminary consumer sentiment of the University of Michigan unexpectedly dropped from 82.5 in December to 80.4 this month.
The data suggests that the Federal Reserve will be able to trim its stimulus program and the economy is robust enough to withstand this. The dollar was supported by such prospects, but the pound was able to outperform the US currency with help of its own supportive domestic fundamentals.
EUR/USD dropped from 1.3618 to 1.3558 as of 16:00 GMT today. At the same time, GBP/USD advanced from 1.6352 to 1.6440 and USD/JPY was down from 104.33 to 104.26.
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