US Data Indicates Recovery - 23.12.2011
US Dollar
The US currency weakened yesterday against the Australian and Canadian counterparts, but remained almost flat against the Swiss franc, the British pound and the euro. Stock markets rose slightly as reports showed the number of initial jobless claims in the US dropped by 4000 to 364000, the lowest level since April 2008, while the University of Michigan consumer sentiment index climbed in December from 64.1 to 69.9, a six-month high. Favorable macro statistics from the US may continue today as durable goods orders are expected to show a 2% November increase (after a 0.5% drop in October), while personal spending may have advanced 0.3% over the same period (following a 0.1% gain). Positive data favored US stocks yesterday – S&P 500 index gained 0.83%, but failed to provide support for the US dollar, which strengthened slightly only against the Japanese yen among the majors. In Asian trading hours today the dollar was either flat or depreciated further, like against the Aussie. The dollar index stays just below 80.
Euro
Despite favorable economic reports decreased investors’ risk aversion, the euro failed to gain any substantial ground against the greenback. In Asian trading hours today the single currency rose to 1.31, although any intraday rally above this level turned out to be only temporary in the recent trading sessions. Yesterday Prime Minister Mario Monti’s emergency budget plan won final approval in the Parliament of Italy. However the 30 billion-euro package was not able to remove pressure from government bonds – the yield on the benchmark 10-year bonds rose to 6.92%. Moreover reports have shown that Italy’s economy shrank 0.2% in the third quarter after rising 0.3% in the second. Anyway before the year-end and in conditions of continuing uncertainty investors may hesitate from making big bets so the euro may remain range bounded somewhere at the current levels.
Canadian Dollar
The Canadian dollar resulted to be one of the best performers of the week. Pair USD/CAD fell from 1.0415 on Monday to 1.0195 by the end of the Asian trading session today. The currency is appreciating with improving statistics from the United States, the Canada’s largest trading partner. Moreover economists expect a report today may show the nation’s economy continued expansion. The growth pace however may have decreased in October from 3% to 2.7% in annual figures, according to preliminary estimations.
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