News Column

US Dollar Falls Amid Positive Economic Data

Nov 30, 2012
US Dollar

The U.S. dollar fell on Thursday as investors turned to riskier currencies after positive economic data pointed to better U.S. GDP growth and jobs situation.

The dollar gained some strength after House of Representatives Speaker John Boehner said there was no progress in "fiscal cliff" talks with U.S. Treasury Secretary Timothy Geithner.

However, the dollar retreated later as Senate Majority Leader Harry Reid said that Democrats were all on the same page on budget talks and Senator Chuck Schumer said there has been progress.

With the end of year drawing near, the currency market was more and more easily influenced by any news about the ongoing debt talks between the Congress and the White House.

Traders has been worried that if the Congress cannot reach a deal by the end of the year, a series of automatic tax increases and government spending cuts will drag the economy back into recession.

The dollar tends to be higher when investors were pessimistic about the economy as the greenback was regarded as a safe-haven asset.

Thursday's economic data came in better than expected, also making the dollar less attractive.

The Commerce Department said that the U.S. economy grew at a 2. 7 percent annual rate in the third quarter, much faster than the previous estimate of 2.0 percent.

Meanwhile, a report from the Labor Department added to the upbeat tone. The report showed U.S. initial jobless claims declined 23,000 in the week ended Nov. 24 to 393,000, as effect of Hurricane Sandy faded.

Pending home sales climbed 5.2 percent in October, surging to its highest level in more than five years, according to the National Association of Realtors.

In late New York trading, the euro gained to $1.2972 from $1.2932 of the previous session while the British pound rose to $1.6038 from $1.6015.

The dollar dropped to 0.9280 Swiss francs from 0.9307 and to 0.9923 Canadian dollars from 0.9926.

The dollar bought 82.15 Japanese yen, higher than 81.90 in the previous session.

Source: Copyright Xinhua News Agency - CEIS 2012

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