The US dollar is slightly lower vs. major currencies but remained firm as doubts about a global economic recovery linger. Market should get further clues from the consumer confidence data due later today. Until then, the dollar is trading mostly on international economic news and equity prices.
The euro rose against the dollar after a larger-than-expected increase in German factory orders. Data showed that German manufacturing orders rose 4.4% in May, higher than forecasts of a 0.5% rise. This was the biggest rise in orders since June 2007 and bolstered hopes of an economic recovery.
The British pound continued its fall against the dollar as weak economic data further heightened doubts that the economy is poised for recovery. Figures showed that the manufacturing output fell 0.5% in May and industrial production fell by 0.6%, with forecasts of both call for a rise of 0.2%. Analysts continue to be concerned that the Bank of England could expand its quantitative easing program, which would heighten inflation and weigh on the sterling.
The Japanese yen strengthened against the dollar as a fall in US equities pushed investors into the risk-averse currency.
The Canadian dollar was slightly higher against the dollar, helped by a better appetite for risk as global equities rebounded. The loonie was held in check by crude oil prices which continued to fall below $63 per barrel.
The Australian dollar strengthened against the dollar after the Reserve Bank of Australia sounded slightly more upbeat in its latest policy statement and kept interest rates unchanged at 3%. The central bank stated that downside risks to the outlook have diminished and that economic conditions have not been as week as expected a few months ago.
The New Zealand dollar recovered from 3-week lows, helped by an improvement in business confidence. A domestic survey showed that business confidence rose from a 35-year low in the second quarter. A net 25% of firms expected general business conditions to deteriorate in the next six months compared to a net 65% the previous quarter. Analysts polled believed that the Reserve Bank of New Zealand will keep interest rates on hold at 2.50% for the rest of the year.
