WSJ: Dollar Rallies as Investors Waver on Strength of Recovery
By DEBORAH LEVINE And WILLIAM L. WATTS
The U.S. dollar gained ground Thursday after economic reports weighed on investors' confidence in the strength of the recovery.
However, a stream of mixed corporate earnings and the start of a two-day summit meeting of European Union leaders kept the greenback in check.
The dollar advanced after a report showed U.S. weekly jobless claims jumped more than expected, while the Philadelphia Federal Reserve's index on regional manufacturing conditions indicated pockets of weakness.
The euro slipped to $1.3097, from $1.3121 late Wednesday, when it notched a one-month high.
The British pound traded at $1.6139, giving up gains after data showed U.K. retail sales rose more than expected in September. Sterling traded at $1.6147 late Wednesday.
The dollar traded at ¥79.29, up from ¥79.03 late Wednesday. The dollar's continued gains versus the yen were fueled in part by strong U.S. economic data on Wednesday, including a jump in housing starts, said strategists at UBS.
The ICE Dollar Index, which measures the U.S. unit against a basket of six major currencies, rose to 79.173 from 79.022 in North American trade late Wednesday. The WSJ Dollar Index, which tracks the greenback against a slightly wider basket, rose 0.2% to 69.40.
Analysts remained tuned in to the potential for comments from European Union leaders gathered in Brussels for a two-day summit. Expectations remain low for any major developments, with Spain seen holding off until at least next month on a request for a bailout and leaders unlikely to decide on whether to disburse a fresh round of aid to Greece.
The euro has been buoyed, however, by expectations that Spain will ultimately ask for help in coming weeks and that Greece's euro-zone partners will eventually give the debt-strapped country more time to meet its deficit targets.
The potential "for disappointment tonight may be limited as long as there are no headlines dampening the expectation of an imminent Spanish request for bailout funds or aid payments to Greece," said Carolin Hecht, currency analyst at Commerzbank.
Spain asking for a bailout would be seen as a good development, because it would prompt the European Central Bank to follow through on a plan to buy the debt of countries that seek a bailout, thereby propping up European bond markets in the midst of the simmering crisis.
Initial underlying technical support for the euro is located around $1.3000-$1.3025, while a move through Wednesday's high near $1.3140 is required for further gains, Ms. Hecht said in a note.
