Naharnet

Dollar Rises as Confidence in U.S. Economy Grows

The dollar rose against other currencies in Asia on Friday as a strong U.S. retail sales report reinforced investor confidence in the world's largest economy.

The dollar was at 118.81 yen in afternoon trade compared with 118.65 yen in New York and sharply higher than the 117.67 yen touched earlier Thursday in Tokyo.

"The strong U.S. retail sales report for November, together with the market reflecting perhaps on the boost to U.S. consumer purchasing power from lower gasoline prices, lifted equities and the dollar," said National Australia Bank.

The Commerce Department said U.S. retail sales in November, the beginning of the holiday shopping season, added a solid 0.7 percent from the previous month and 5.1 percent from a year ago.

Consumer spending accounts for almost three quarters of output in the world's biggest economy and the figures are the latest to indicate a strong recovery is on track, adding to pressure on the Federal Reserve to hike interest rates sooner than later.

The euro was mixed after losing ground in reaction to the disappointing sale of new loans by the European Central Bank (ECB) to banks on Thursday.

The single currency slipped to $1.2396 Friday from $1.2410 in U.S. trade while firming to 147.28 yen from 147.24 yen.

The ECB's loan sale was "no blockbuster, not that anyone expected it", NAB said in a note.

"The outcome was in line with already-low expectations, a stark contrast to the rip-roaring U.S. economy that posted a strong retail sales report for November" even with the deflating effect from lower gas prices, it said.

The ECB said 306 banks had borrowed a slack 129.8 billion euros in the second round of its program of cheap, long-term loans aimed at boosting the economy.

The result raised the prospect that the ECB will launch more aggressive easing early next year.

The dollar was mostly higher against other Asia-Pacific currencies.

It gained to Sg$1.3119 from Sg$1.3112 on Thursday, to 1,101.94 South Korean won from 1,098.35 won and to 12,437.00 Indonesian rupiah from 12,338.00 rupiah.

It also rose to 62.44 Indian rupees from 62.14 rupees but fell to 32.79 Thai baht from 32.82 baht. It remained unchanged at 44.59 Philippine pesos.

The Australian dollar bought 82.76 U.S. cents against 83.29 cents, and the Chinese yuan fetched 19.17 yen against 19.14 yen.

Source: Agence France Presse


Copyright © 2012 Naharnet.com. All Rights Reserved. https://www.naharnet.com/stories/en/158888