Tuesday, 17 Aug 2010

Dollar Mixed on Positive Economic Data

The greenback varied in today's trading, falling against the euro but rising versus the pound, yen, and Swiss franc. Positive economic data from the U.S. helped to strengthen the dollar. Equities and crude oil also finished stronger on the day.

The EUR/USD closed higher at 1.2877 from an opening day price of 1.2775. The GBP/USD finished the day lower at 1.5574 after starting at 1.5660. The USD/JPY was higher at 85.50 from 85.32.

New building permits for the U.S climbed 0.57M over the previous month. The reading was largely in line with economists' expectations of 0.58M.

U.S. core inflation data was also a positive for the dollar. Core inflation for the month of July rose 0.3%. Economists forecasted a rise of only 0.2%. While usually a negative for an economy, higher inflation will be accepted to stave off fears of deflation in the U.S.

Spot crude oil prices received a bounce in today's trading. This is the first gain for the commodity in almost 10 days. The rise in the price coincided with both positive fundamental data along with a technical boundary that the commodity ran into due to the recent sharp decline in the price of spot crude oil. The price of spot crude oil rose today to a high of $77 before falling back to close up at $76.150. The gain of 0.8% came after an opening day price of $75.57.

As of recent crude oil prices have been closely tracking the movements of the equity markets. The near term trend for the Dow Jones Industrial Average has turned lower but today the widely followed stock index finished the day higher by 1 %.