Wednesday, 30 Dec 2009

Dollar Rallies on Stronger than Expected Chicago PMI report

The U.S dollar rose versus the EUR and headed for its first monthly advance since June as an index of U.S. business strength reached the highest level in almost 4 years. The Institute for Supply Management-Chicago business barometer surged to a four-year high, topping forecasts. The Institute for Supply Management-Chicago Inc. said today its business barometer increased this month to 60, the highest level since January 2006

The greenback rallied as investors looked for signs a recovery is taking hold. Some traders have moved to safer assets like the Dollar to lock in profits after a strong 2009. The U.S currency appreciated 0.4% to $1.43 per EUR, from $1.4354. It reached $1.4291, the strongest since Dec. 23. Among the major currencies, the U.S dollar notched some of its strongest gains versus the Japanese yen as reports insinuated that Japan Airlines Corp. may declare bankruptcy. The USD climbed to its highest since early September, trading at 92.46 after earlier reaching a high of 92.77 yen. Improved U.S. data in the past month has prompted many traders to reevaluate their forecasts on the timing of the Federal Reserve's first rate hike. That has lifted the U.S dollar from a 14-year low against the Yen and revived its fortunes against other majors well into 2010.