LONDON (SHARECAST) - The dollar gained against major currencies Monday as the panic gripping global markets started to subside and focus turned to Ben Bernanke’s support for another round of economic stimulus for US assets.
Monday saw global markets mark solid gains and with the Dow closing above the 9,000 mark there were tentative hopes that global government efforts to sooth the credit crisis is working.
The dollar index, which measures the greenback against six major currencies, was up at 82.989 from 82.552 late Friday.
The Fed chairman said Congress should consider a second economic stimulus package to deal with the weak economy. "With the economy likely to be weak for several quarters and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," he said. His comments lifted the dollar against the euro and sterling.
Upbeat US economic data also boosted the dollar. The Conference Board's report on leading economic indicators for September rose 0.3%, against expectations of a 0.3% fall. In August, it fell 0.9%.
The dollar traded at 101.91 against the yen, up from 101.58 yen late Friday. The yen has recently enjoyed plenty of interest amid strong risk aversion as the financial crisis rolls out however a sharp recovery in Japanese and Hong Kong stock markets Monday put pressure on the yen, as traders switched into higher yielding currencies.
Sterling headed south against the dollar as gloom about the UK’s economic outlook weighed on sentiment.
Data out Monday showed public sector net debt for April to September increased to £37.59bn compared with £21.46bn the same time a year earlier.
