Tuesday 24 January 2017

Dollar falls on demand for currencies with higher-yield assets

Published 31/12/2010 | 05:00

THE dollar fell against most of its major counterparts as economic data signaled the world's largest economy is accelerating into the new year, encouraging demand for currencies in nations with higher-yielding assets.

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The US currency weakened as economic reports showed business expansion, fewer jobless claims and more pending home sales.

Canada's currency traded above parity with the greenback for the third day. Brazil's real rose the most in six weeks after the central bank said it would buy dollars. The Swiss franc climbed to a record versus the euro, yen and dollar.

"The market prefers to be in currencies that are driven by fundamentals and that's buying commodity currencies," said John McCarthy, director of currency trading at ING in New York. "The data, which one would ultimately assume is positive for the US, looks better for risk, which in turn puts downward pressure on the dollar."

The dollar weakened 0.3pc to $1.3268 per euro in New York, from $1.3225 on Wednesday. It rose 0.1pc to 81.72 yen after touching 81.29 yen, the lowest since November 9, from 81.62 yen yesterday.

The US currency declined 0.9pc to 0.9371 per Swiss franc from 0.9456 franc, after touching a record low of 0.9364 franc. The franc appreciated as much as 0.8pc to a record 1.2402 against the euro and as much as 1.7pc to 1.4402 per pound.

Business in the US expanded in December at the fastest pace in 22 years.

The Institute for Supply Management-Chicago Inc. said yesterday its business barometer rose to 68.6 this month, exceeded the most optimistic forecast of economists surveyed by Bloomberg and the highest level since July 1988.

Initial US jobless claims fell last week to the lowest level since July 2008, a sign that the labour market is improving heading into 2011.

The number of contracts to buy previously owned homes in the US rose last month for the fourth time in five months, the National Association of Realtors said. (Bloomberg)

Irish Independent

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