The U.S. dollar gained overnight as global equities ticked lower while China reported weak data and Moody’s Investor Service said France’s top credit rating is under pressure. The dollar also rose against its commodity-based counterparts as the price of oil and precious metals declined. With U.S. equity futures showing American shares will also fall, the U.S. dollar may get a boost during our trading session. However, economic data released today will likely affect stock markets. Wholesale prices in the U.S. rose more than forecast in September, boosted by gasoline, food and trucks, indicating inflationary pressures remain mild in production. The producer price index climbed 0.8%, the most in five months, after no change in August, Labor Department figures showed today. The print was higher than the 0.2% projected by economists. The so-called core measure, which excludes volatile food and energy, gained 0.2% also more than predicted. Later this morning, the NAHB Housing Market Index is expected to register at 15, up from 14 the month prior.
The Euro fell for a second day after Moody’s Investor Service warned that France may lose its top credit rating, adding to concern that European leaders will find it difficult to resolve the region’s debt crisis. France’s Aaa credit rating is under threat from worsening metrics and the potential for additional liabilities from the regional crisis, Moody’s said last night. The nation’s financial strength has weakened because of the global financial crisis, making its debt measures the worst among its Aaa rated peers, Moody’s said. The Euro extended its decline after the Zew Center for European Economic Research said its index of German investor confidence dropped to the lowest in nearly three years. The Euro fell yesterday as German Chancellor Angela Merkel’s office knocked down what it called “dreams” that the Oct. 23 summit would resolve the debt crisis.
The British pound was largely unchanged versus the U.S. dollar overnight even as stocks slid and record-tying U.K. inflation failed to persuade investors that the Bank of England will temper its bond-buying program after it was revived this month. Consumer price gains accelerated to match a record high in September, rising 5.2% from a year earlier, the Office for National Statistics in London said today. The U.K. central bank announced an extension of its bond-purchase program to 275 billion pounds from 200 billion pounds on October 6, saying the “deterioration in the outlook has made it more likely” that inflation will undershoot the bank’s 2.0% target rate in the near term. Bank of England Governor Mervyn King will deliver a speech in Liverpool today and minutes of the central decision showing how policy makers voted will be published tomorrow.
