Thursday, 16 Sep 2010

Dollar Tumbles on Positive U.S. Economic Data

The U.S. dollar fell against most of the major currencies on Thursday trading. The dollar lost about 120 pips against the euro, and the EUR/USD pair is now trading near the 1.3100 level.

The U.S. weekly Unemployment Claims showed that applications for unemployment benefits unexpectedly fell last week to the lowest level in two months, signaling that the labor market is improving. In addition, a report has shown that global demand for U.S. stock, bonds and other long-term financial assets was stronger than forecast in July. The positive data have increased optimism regarding a global economic recovery, and as a result boosted demand for higher-yielding assets such as the euro.

Looking ahead to tomorrow, the most significant economic release looks to be the U.S. Core Consumer Price Index, which is considered to be the most reliable U.S. inflation gauge. A positive data above 0.1% might increase demand for risky assets further.