News Column

Dollar Eases, Euro Withstands Weak Inflation

June 16, 2014

WASHINGTON (Alliance News) - The dollar was slightly weaker Monday, unable to extend recent gains versus the euro despite another tame reading on euro zone inflation.

The European Central Bank only recently announced measures at generating inflation, so it will likely disregard today's data, allowing the euro to stabilize.

The dollar eased to USD1.3560 versus the euro, having touched a 4-month peak of USD1.35 earlier in June.

There was little movement versus the sterling, with the dollar briefly slipping to USD1.70 before heading sideways.

Risk aversion helped the yen today, resulting in some modest losses for the dollar against its Japanese rival. The pair was bouncing around Y101.90 Monday afternoon.

Traders were keeping an eye on a few geopolitical situations, particularly the conflict between Sunni insurgents and the Iraqi military.

With the US weighing its options to settle the crisis, the safe haven yen has found its footing.

In economic news, industrial production in the US rose by slightly more than expected in the month of May, according to a report released by the Federal Reserve on Monday, with the increase partly due to a rebound in manufacturing output.

The Fed said industrial production increased by 0.6% in May following a revised 0.3% decrease in April.

Homebuilder confidence in the US has improved by more than expected in the month of June, according to a report released by the National Association of Home Builders on Monday. The report showed that the NAHB/Wells Fargo Housing Market Index climbed to 49 in June from 45 in May.

Meanwhile, final data from Eurostat showed that inflation eased to 0.5% in May from 0.7% in April. The rate came in line with the flash estimate published on June 3. Month-on-month, prices fell 0.1%.

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Source: Alliance News

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