LONDON (SHARECAST) - Better than expected economic data out of the States pushed the dollar higher against the major currencies, though hopes Europe has its debt crisis under control limited gains against the single currency.
Traders also say China could be about to begin a round of monetary tightening following yesterday’s report revealing the country’s economy grew by 10.3% in 2010, ahead of forecasts following a strong final quarter. That hurt the Aussie dollar.
There are hopes that the US jobs news and better housing report will aid a dollar recovery after finding the going tough in recent weeks.
Government figures showed the number of Americans making their first unemployment claim fell to 404,000 last week from 441,000 the time before. Analysts were looking for a drop to 420,000. Continuing claims declined to 3.86m from 3.89m compared with predictions of an increase to 3.96m.
Meanwhile, sales of existing US homes rose 12% in December, taking the annual sales rate to 5.28m homes, the highest since May last year.
But the greenback didn’t have it all its own way.
The recent success of bond auctions in Spain and Portugal, the two countries feared to be next in line for European bail-out funds, has sent the euro to a two-month high against the US currency.
And the single currency stuck around those levels on reports the Germans are mulling a plan to let Greece restructure its sovereign debt, though this has been denied.
Pressure on the weaker eurozone countries has eased on talk the European Financial Stability Facility will buy or help finance the purchase of government debt from them.
