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Jumaat, 24 Februari 2012

U.S. dollar lower on strong euro zone numbers, ECB support

The U.S. dollar traded lower against its major counterparts Friday, as stronger than expected German business confidence figures and European Central Bank support fuelled euro zone confidence.

During U.S. morning trade, the dollar was lower against the euro, with EUR/USD rising 0.28% to hit 1.3411.

The ECB may be tapped next week for EUR470 billion in three year funds for distribution on February 29. This is nearly the same amount that was provided in December, according to a Bloomberg survey.

This infusion of cash is expected to prolong the rally in the bond markets and will be used primarily to support the Italian and Spanish bond markets.

Euro zone inflation is in check and no floor exists under the 1% interest rate, ECB council member Erkki Liikanen told CNBC, calming fears of upside risk in the region.

Yesterday, the euro found strength when German research institute Ifo said its Business Climate Index rose to109.6 in February from a reading of 108.3 the previous month, surpassing expectations for an increase to 108.8, increasing hopes that the euro zone’s largest economy is on the road to recovery.

The greenback was also lower against the pound, with  GBP/USD adding 0.48% to hit 1.5820.

The pound found support after the Confederation of British Industry reported  that U.K. factory orders rebounded to hit a six-month high in February, rising by 13 points to minus 3.0, from a reading of minus 16 in January.

The greenback was higher against yen but  lower against the Swiss franc, with  USD/JPY gaining 0.65% to hit 80.53  and  USD/CHF giving back 0.31% to hit 0.8988.

Japan's Prime Minister Yoshihiko Noda said earlier that he wants to have one-on-one talks with the Bank of Japan governor more frequently and to boost cooperation with the central bank.

The comments came after the BoJ’s decision last week to increase the size of its asset-purchase program to JPY30 trillion, sending the yen broadly lower.

In addition, the greenback was higher against its Canadian, Australian and New Zealand counterparts, with  USD/CAD retreating 0.20% to hit 0.9993, AUD/USD  falling 0.06% to hit 1.0711 and  NZD/USD slipping 0.01% to hit 0.8364.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.12% to hit 78.58.

In the U.S., a report by the Department of Labor showed that the number of individuals filing for initial jobless benefits in the week ending February 18 held steady at 351,000, missing expectations for an increase of 3,000 to 354,000.

Jobless claims have remained below 400,000, a level historically associated with an improving labor market, in 15 of the past 17 weeks.

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