Forex Market Update: Dollar Gains after Economic Data
The U.S. dollar edged higher against the Japanese yen and the euro on Thursday as market participants digested some solid U.S. economic data. The yen, meanwhile, edged higher against the euro.
The dollar gained after a report showed that manufacturing activity in the Chicago area rose to an 11-month high in February. The Chicago PMI index climbed to 56.8 in February from 55.6 last month. The reading came above consensus forecast of 54. Meanwhile, a report from the Labor Department released on Thursday showed that initial jobless claims fell 22,000 to 344,000 for the week ended February 23.
The fourth-quarter GDP data, however, fell short of expectations. The Commerce Department said that the U.S. economy grew at a 0.1% annual rate in the fourth quarter of 2012.
Apart from the fourth-quarter GDP data, most other economic data released in the last few days has pointed to continuing economic recovery in the U.S.
The improvement in labor market is especially important as the longevity of Federal Reserve’s bond buying program depends on how quickly the labor market fully recovers. Earlier this week, Federal Reserve Chairman Ben Bernanke, in his testimony to the Congress, had said that he favored the central bank’s bond buying program. However, if the labor market continues to improve, the Fed might be prompted to end its bond buying program sooner than anticipated. An early end to the bond buying program would be a positive for the dollar.
On Thursday, the greenback rose 0.55% against the euro and 0.45% against the yen.
The yen came under pressure after Japanese Prime Minister, Shinzo Abe, as expected, nominated Haruhiko Kuroda for the post of Bank of Japan (BOJ) governor. Kuroda, who is the President of Asian Development Bank, has been a strong supporter of aggressive monetary easing measures.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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