MW: Dollar hits highest since early April vs. euro
Global data undercuts risk appetite, pressures Australian dollar
By William L. Watts and Lisa Twaronite, MarketWatch
NEW YORK (MarketWatch) — The U.S. dollar pared gains in U.S. morning trading on Thursday, after hitting the highest in more than six weeks against the euro, as slightly better U.S. data took reduced some of the lure of the greenback against falling commodities, higher-yielding currencies and stocks.
The dollar index DXY +0.01% , which measures the greenback against a basket of six currencies, rose as high as 75.645, then lately traded at 75.481, up from 75.259 late Wednesday.
The euro EURUSD +0.01% bought $1.4179, down from $1.4211 in North American trading Wednesday. It fell as low as $1.4121 in European trading hours. See real-time currency quotes and tools.
Against the Japanese yen, the dollar USDYEN -0.52% slipped to ¥80.89 from ¥80.98 late Wednesday.
Metals and oil futures were lower, with silver futures losing 7.7%, though they briefly pared losses after the early U.S. data. Asian and European equities fell and U.S. stocks opened lower. Read about silver, gold.
The dollar has been trading in opposite directions to commodities in recent days, as investors seek relative stability against volatile energy and metals prices and the currencies that often trade alongside them, such as the Australian dollar. In European trading, it extended gains against the euro after soft economic data in Australia and Europe and more policy tightening in China.
But an improvement in jobless claims and retail sales in the U.S. led stocks and commodities to briefly pare those losses, leaving currency trading to adjust how data from around the world fits into an evolving outlook for growth and what that implied for the greenback.
“This recent deterioration in market confidence has been prompted in part by a loss of momentum in the macro picture, while the sharp drop in commodities is generating concerns about an overall decline in demand and global growth,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. “These various indicators taken together indicate the potential for additional dollar strength.”
U.S. Labor Department said first-time unemployment claims in the U.S. fell to 434,000 in the latest week. See story on U.S. jobless claims.
“We expect claims to fall back below 400,000 in the coming weeks,” said economists at RDQ Economics.
Separate reports showed retail sales rose 0.5%, a little less than forecast, and wholesale prices climbed 0.8% last month. Read about retail sales.
The U.S. data followed key reports out of Europe, the U.K. and Australia.
Seasonally-adjusted industrial production across the euro zone fell by 0.2% in March from the previous month, and was up 5.3% versus March 2010. Industrial production was forecast to rise 0.3% from the preceding month.
“The economic news disappointed across the board, with Australian unemployment numbers posting a big miss and both U.K. and [euro-zone] industrial production coming in much weaker than expected,” said Boris Schlossberg, director of currency research at GFT.
An International Monetary Fund report on the European economic outlook also served to weigh on the euro after the Washington-based institution said the European Central Bank should go slow in hiking interest rates, said Kathleen Brooks, research director at Forex.com, in emailed comments. Read about the IMF report.
