Dollar Strengthens on Strong Economic Data, Fed Official’s Remarks With BC-Dollar-Gold-Glance
NEW YORK (AP) _ The dollar rose broadly Tuesday, reaching its highest level against the yen since mid-October, in a rally inspired by strong U.S. economic news and a Federal Reserve banker’s hints of further interest rate increases.
Traders said the dollar also benefited from some resilient weakness in the German mark, which fell in the aftermath of Norway’s vote to reject membership in the European Union.
It was the third straight day of strength in the dollar, and in contrast to prior days the rally was broad-based. That was seen as a sign to some currency brokers that the dollar may have snapped out of its prolonged slump.
″There’s a perception that the dollar might have seen its lows for the year,″ said Jerry Gleason, a foreign exchange trader at the New York branch of Banque Indosuez, a French banking company.
A catalyst for the dollar’s strength was a report by the Conference Board, a New York business research concern, that showed U.S. consumer confidence in the economy surged in November to its highest level since July 1990.
The monthly report suggested that more Americans are feeling prosperous and secure about the future. It came amid signs of U.S. economic strength, with data suggesting jobs are more plentiful, sales of American goods are rising and inflation isn’t a concern.
″There’s been a change in sentiment,″ said Jay Wertheimer, senior foreign exchange trader at the New York branch of Banco di Sicilia, an Italian bank. ″We’re just faced day after day with good fundamental economic news. I think this ghost of inflation that’s scaring us seems to have subsided.″
In late New York trading, the dollar fetched 98.97 yen, up from 98.68 yen late Monday. It was the highest level for the dollar in New York since Oct. 13.
The dollar also changed hands in New York at 1.5706 marks, up from 1.5668 marks late Monday, extending gains that have pushed the dollar to its highest level against the mark since early September.
Traders said remarks by Federal Reserve Vice Chairman Alan Blinder in Jacksonville, Fla. also inspired some dollar-buying. Blinder hinted that the central bank might raise interest rates further. The Fed has increased rates six times this year in an effort to thwart inflation.
Blinder, a Clinton administration appointee who is perceived to be soft on inflation, said ″the economy is looking extremely strong.″ He also said any further declines in civilian unemployment, which hit a four-year low of 5.8 percent in October, could be inflationary.
Rising U.S. interest rates, coupled with low inflation, can attract investors to dollar-denominated assets. Such a trend creates demand for dollars and raises their value relative to other currencies.
″At some point, this has got to make the dollar more attractive,″ said Curtis Perkins, a foreign exchange trader at the New York branch of Chemical Bank.
Other late dollar rates in New York: 1.3290 Swiss francs, up from 1.3285; 1.3787 Canadian dollars, up from 1.3776; 5.3870 French francs, up from 5.3765; and 1,618 Italian lire, up from 1,616.
The British pound traded at $1.5624 in New York, up from $1.5613. Earlier in London, the pound fetched $1.5642, up from $1.5625.
Other late dollar rates in London: 1.3250 Swiss francs, down from 1.3275; 5.3720 French francs, up from 5.3710; 1,614 Italian lire, down from 1,616; and 1.3775 Canadian dollars, down from 1.3788.