Dollar Steady on Taper Conundrum: The U.S. dollar held steady against most other major currencies on Friday, after mixed data disappointed the market. Adding to worries that the nation’s economic recovery is stalling, which may cause the Fed to extend the $85 billion dollar a month bond buying program for a little longer. The day got off to a bad start after the University of Michigan said its consumer sentiment index fell to 80.0 in August, down from a reading of 85.1 the previous month. Analysts had expected the index to rise to 85.5 this month. Things didn’t get any better after official data showed that U.S. building permits rose 2.7% to 0.943 million units in July, disappointing expectations for an increase of 2.9% to 0.945 million units. The previous month’s figure was revised up to 0.918 million units from 0.911 million. The report also showed that housing starts rose 5.9% to 0.896 million units last month, confounding expectations for a 8.3% increase to 0.900 million units. The previous month’s figure was revised up to 0.846 million units from 0.836 million. However it wasn’t all bad news, the Bureau of Labor Statistics said that non-farm productivity rose 0.9% in the second quarter, beating expectations for a 0.6% gain, after a 1.7% decline in the previous quarter. The data caused the dollar to fluctuate for most of the day, with EUR/USD hitting 1.3380 during the morning session, but falling back in the afternoon. Ending the day down 0.10% at 1.3333, after the European Central Bank announced that the current account surplus narrowed to EUR16.9 billion in June, down from EUR19.5 billion the previous month. Official data also showed that European consumer price inflation remained unchanged, despite rising food prices, at an annualized rate of 1.6% in July, in line with expectations. In other news the greenback strengthened against the Loonie after Canada posted weak manufacturing data, USD/CAD climbing 0.29% to 1.0337, and the Kiwi was hit after an earthquake struck near the capital Wellington, NZD/USD ended the session down 0.43% to 0.8109.
Posted on: Mon, 19 Aug 2013 05:02:03 +0000
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