Dollar Gains on US Data
The US dollar rose against most major currencies on Friday bolstered by US data indicating a rise in manufacturing and stable consumer price inflation. Ongoing concerns about the Fiscal health of Greece pressured the euro despite the government’s promises to raise taxes and cut spending. Dan Cook of IG Markets in Chicago stated, “What is really crushing the euro is additional concern about the serviceability of the massive amount of debt rung up in Greece.” Euro zone finance ministers said that the Greek government misled them about the size of the nation’s budget deficits and indicated a willingness to impose sanctions if needed. The euro fell 0.9% vs. the greenback on Friday trading at $1.4373. Greece experienced its first recession in 16 years in 2009 and is widely seen as the Euro Zone’s most indebted member. Debt accounts for 120% of Greece’s Gross Domestic Product.
Dollar on Track For Further Gains
Despite mediocre US economic data some traders believe the dollar is on track for further gains. Michael Woolfolk of BNY Mellon in New York said, “It’s not a surprise to see better-than-expected manufacturing data. A point of this recovery, outside of fiscal stimulus, is that the U.S. manufacturing sector is already on the rebound.” The euro had fallen in Asian trading on rumors, later proved false, that German Chancellor Angela Merkel would resign. Last Thursday European Central Bank President Jean-Claude Trichet said that Greece would receive no special treatment and said that recovery in the Euro Zone was uneven.
New US Data Due This Week
US data due this week will likely be a focus of currency markets. Data on U.S. net capital flows, producer prices, housing starts, and initial jobless claims will be released this week and investors will be searching for clues about the direction of the US economy. Tim Evans of Lind-Waldock stated, “The markets will possibly be nervous with U.S. data that’s not favorable. If those numbers come in bearish, then that would further discount the dollar.”
Quick Forex Tip: There are many factors that affect currency exchange rates and those who want to trade forex markets should be familiar with them. Economic factors are probably the most important in determining the value of a currency. Political conditions can also affect exchange rates. Those who want to trade forex markets would be well advised to keep abreast of current political and economic events. Thanks to the internet, those with the right knowledge and an internet connection can join this exciting market and take advantage of the lucrative opportunities it can provide for investors.
