Reply #23: Forex - Dollar boosted by strong industrial production, housing starts data [View All]

[Ghost Dog]

http://orange.advfn.com/news_Forex-Dollar-boosted-by-strong-industrial-production-housing-starts-data_20662531.html

LONDON (Thomson Financial) - The dollar firmed as housing starts and
industrial production data came in above expectations.

Figures from the Commerce department showed the number of new homes
beginning construction rose 2.5 pct in April from March to 1.528 mln units, its
highest level for three months. Analysts had been expecting a fall to 1.48 mln
units.

However, housing permits, which give an indication of future housing starts,
plunged 8.9 pct to 1.429 mln units, the sharpest monthly drop since February
1990.

"The dollar has rallied across the board as traders focus on the persistent
strength in housing starts, shrugging off the more forward-looking permits,"
said Ashraf Laidi, currency analyst at CMC Markets.

The greenback was also boosted by strong industrial production figures for
April, which were boosted by cooler US weather during the month.

Industrial production rose 0.7 pct month-on-month, well above analyst
expectations for a 0.2 pct rise, while utility output was up 3.5 pct.

"First-quarter US GDP looks very weak, but so far second-quarter data is
shaping up as above trend," said Jamie Thomson at Thomson's IFR Markets.

Meanwhile, sterling was lower, falling despite a reasonably hawkish Bank of
England inflation report.

The BoE signalled there will be a further quarter-point interest rate
increase in the coming months to 5.75 pct. It also forecast CPI will be around
its 2.0 pct target in two years' time, although the medium-term risks to
inflation are to the upside.

Analysts said the report, while reasonably hawkish, provided little support
for sterling as markets are already expecting a rate rise in the coming months.

"For a market that is virtually fully priced for a hike, this leaves the
market more vulnerable to any dovish signals than any hawkish ones, with
attendant downside risks for the pound," said Daragh Maher, forex strategist at
Calyon.

Relatively benign wage growth data also weighed on the pound: average
earnings in the three months to March were up 4.5 pct year-on-year compared with
expectations for a 4.8 pct increase.

This overshadowed figures showing unemployment fell further than expected in
April, with the claimant count down by 15,700, compared with forecasts for a
5,000 fall.

Elsewhere, the euro was little affected by this morning's inflation data,
which was consistent with the widely-held view interest rates will rise in June
and more rate rises later this year are a possibility.

The euro zone's harmonised index of consumer prices rose a final 1.9 pct
year-on-year in April, revised up from a provisional estimate of a rise of 1.8
pct and the same rate as in March.

/...

edit to add: Watch on Swiss Franc (CHF), Pound Sterling (GBP)