The U.S. dollar and the Japanese yen weakened against most of their major rivals following strong economic data released yesterday in the United States and as stocks from Tokyo to London rose. The greenback fell the most versus the Australian and New Zealand dollars as rising commodity prices boosted investor appetite for the South Pacific nation’s assets. However, gains in the Aussie were limited before the Reserve Bank of Australia releases minutes next week of its December 6th meeting when the central bank implemented a second straight interest-rate cut. The economic docket showed that the cost of living in the U.S. stagnated in November as gasoline prices dropped; supporting the Federal Reserve’s view that inflation remains in check. The unchanged reading in the consumer price index last month followed a 0.1% decline the prior month, the Labor Department reported this morning. The data follows yesterday’s producer price index which rose only 0.1%. With inflation basically non-existent in the U.S., the Federal Reserve will likely have the scope to continue to hold interest rates at record lows.
The Euro rebounded from near an 11-month low against the U.S. dollar as traders added risk to their books overnight. The euro found support after Luxembourg’s Jean-Claude Juncker said Europe should meet a deadline for arranging loans with the International Monetary Fund as part of a crisis-fighting package. Juncker, who leads the group of euro finance ministers, also said he will decide today whether to call a meeting of the group next week to discuss the debt crisis. In addition, Italy’s Prime Minister Mario Monti survived a confidence vote on his budget plan, adding to the “risk on” sentiment.
The British pound strengthened modestly against the U.S. dollar on general risk assumption. The sterling remains near its yearly highs against the Euro as traders look for European exposure while staying out of the 17-nation currency. There was no economic data released today in the United Kingdom.
