Price declines bolster dollar’s appeal<http://www.ft.com/cms/s/0/2da2978e-29a6-11de-9e56-00144feabdc0.html?ftcamp=rss>
By Miles Johnson Published: April 15 2009 11:20 | Last updated: April 15 2009 23:04 The dollar strengthened against the euro and yen on Wednesday after data showing a monthly fall in US inflation<http://www.ft.com/cms/s/0/85117d2e-2932-11de-bc5e-00144feabdc0.html>data boosted haven demand for the currency. US consumer prices fell in March by a larger than expected 0.1 per cent to record their first annual drop in more than 50 years. Core consumer prices, comprised of data stripping out energy and food prices, rose by 0.2 per cent. Other data on US industrial production data showed a further contraction in March but reinforced expectations that the pace of deterioration in the wider economy was slowing. “The stronger production and lower prices are likely to be mildly supportive of risky assets – lower prices mean more scope for continued policy stimulus,” Barclays Capital said. It added that this should provide support to “riskier” currencies such as the Australian and New Zealand dollars and the British pound. The US dollar was also bolstered by falls for global equities and trepidation ahead of earnings figures from several leading US banks later in the week. Sentiment towards the banking sector – viewed as a proxy for risk appetite – improved earlier this week after forecast-beating earnings from Goldman Sachs. But optimism that the global economic slump might have bottomed out was knocked by data on Tuesday showing a sharp contraction in US retail sales in March, Late in New York the dollar was up 0.4 per cent against the euro to $1.3208 and had gained 0.4 per cent on the yen to Y99.33. The US currency was down 0.3 per cent at $0.7260 against the Australian dollar and gained 0.5 per cent on the New Zealand dollar to $0.5801. However, the dollar weakened against the pound after the British currency was helped by improved UK housing data. The pound briefly rose above the $1.50 level against the dollar for the first time since January, before retreating to $1.4976, a gain of 0.5 per cent. The euro, meanwhile, slipped further against the pound and dollar after Axel Weber <http://www.ft.com/cms/s/0/f62e50a0-29a9-11de-9e56-00144feabdc0.html>, a member of the European Central Bank’s governing council, said the ECB would announce a package of “non-standard measures” when it meets in May. Mr Weber said that the measures would continue for the rest of this year and into the next but that the eurozone currently faced no “prominent deflation risk”. The euro fell 0.9 per cent against the pound to €0.8802 and slipped 0.1 per cent against the yen to Y131.15. John Hardy, a strategist at Saxo Bank, said: “While risk appetite may be getting a bit frothy ... the pound may remain resilient versus the euro with the still festering problems for the eurozone largely left unaddressed, especially the terrible costs that the strong euro is having on its weaker members.” Copyright <http://www.ft.com/servicestools/help/copyright> The Financial Times Limited 2009 --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
