The US dollar fell vs. major currencies as increased risk appetite after better-than-expected earnings from Intel. The consumer price index rose 0.7% in June from the previous month but fell 1.4% from the previous year is the biggest drop since January 1950. Industrial production fell 0.4% in June, slightly better than forecasts for a 0.6% fall. Capacity utilization fell to 67.9% in June from 68.0% the previous month. Investor optimism improved after better-than-expected earnings reports by Goldman Sachs Group Inc. and Johnson & Johnson provided that yesterday.
The euro rose against the dollar as a rise in global stocks increased investor confidence for riskier assets. Data showed that European consumer prices fell 0.1% in June as core inflation excluding food and energy was 1.4%. Inflation in Germany, Europe’s largest economy, was flat while prices fell in other Euro Zone countries.
The British pound strengthened against the dollar with better-than-expected data helping increase the demand for riskier assets. UK unemployment claims climbed 23,800 in June to 2.38 million, beating forecasts of a 41,300 increase.
The statistics office reported the jobless rate on the ILO measure was 7.6%, which was slightly worse than forecasts of 7.4%. Average Earnings for the three months to May increased 2.3%, which is up from the previous 0.8%.
The Japanese yen fell as global stocks rose on speculation of improving corporate earnings, dampening demand for the safe-haven currency. The Bank of Japan kept its interest rate at 0.1% at the end of its two-day policy meeting today.
The Canadian dollar hit a one-month high of against the dollar as crude oil rose above $60 a barrel. The loonie touched 1.1192 per dollar, its strongest since June 15. The currency remained higher even despite government report that showed Canadian factory sales dropped 6% in May, worse than forecasts of a 2.5% drop.
The Australian and New Zealand dollar both gained against the dollar as investor appetite towards higher-yielding assets improved. Investor confidence in a global recovery was helped by US industrial production, which showed that production fell at a slower place. Traders have increased bets recently that central banks of Australia and New Zealand will begin to raise interest rates from current rates of 3% and 2.5%, respectively. The kiwi was also helped by statements from the Prime Minister saying that he agreed with the central bank’s assessment that the economy is starting to recover from the recession.
