The U.S. dollar rebounded against the euro and some other major currencies Thursday as investor focus returned to weak euro-zone and global economic indicators, but dropped against the kiwi after New Zealand held interest rates steady.
The ICE dollar index DXY, which measures the greenback against a basket of six other major currencies, climbed to 83.642 in Tokyo afternoon trading, from 83.573 late Wednesday in North America.
The WSJ dollar index BUXX, a recently launched benchmark tracking the greenback against some of the most heavily traded global currencies, likewise rose to 72.49 from 72.43.
The euro EURUSD pulled back to $1.2133 from $1.2152, giving up some of the ground recovered the previous day. The retreat reflects waned optimism over European Central Bank official Ewald Nowotny’s remarks that he saw merit in favoring a banking license for the euro-zone’s permanent rescue fund.
A banking license for the European Stability Mechanism would give it access to funding from the ECB.
Kathy Lien, managing director of foreign-exchange strategy at BK Asset Management, described the common currency’s rise on Wednesday as “nothing but a relief rally.”
“Let’s be clear, a license hasn’t been announced and in fact, Germany’s Constitutional Court hasn’t even approved the ESM,” she said, adding that meanwhile, data from the euro-zone continue to surprise to the downside.
Germany’s business confidence data and preliminary manufacturing indicators from the euro-zone released this week confirmed the region’s economy weakened further amid the ongoing debt crisis.
Among other major currencies, the dollar USDJPY was changing hands at 78.11 Japanese yen, little changed from ¥78.12 late Wednesday, while the British pound GBPUSD was fetching $1.5475, down from $1.5501.
The New Zealand dollar NZDUSD, or kiwi, rose to 79.11 U.S. cents from 78.83 late Wednesday.
The Reserve Bank of New Zealand on Thursday left its policy interest rate unchanged at 2.5%, as widely expected, citing a weak external environment.
However, several analysts still expect the central bank to raise interest rates some time next year amid a relatively robust domestic economy.
“Since the last update, in June, we have received new information on the local economy, suggesting that growth was stronger than expected while inflation was lower than expected,” HSBC economists wrote in a note to clients.
“The rise in inflation will also motivate modest rate hikes next year, particularly as the local economy’s potential growth rate appears lower than previously, and there are already signs of some capacity constraints emerging,” they said.
The Australian dollar AUDUSD, meanwhile, rose slightly to $1.0317 from $1.0313.
Marketwatch
