Dollar Gained on Weaker GDP Reports - 7.3.2012

US Dollar The dollar climbed to a new local high yesterday, having weakened only versus the Japanese counterpart. The dollar index rose to 79.86, the highest level since February 16, as investors increased demand for the refuge currency on concerns global growth is decelerating and the time is coming when Greece has to complete the debt deal with private creditors. The yen is turning out to be more stable this week against the greenback. Pair USD/JPY dropped from Monday’s 81.85 to 80.58 in Asian trading hours today. The US currency also strengthened against its northern counterpart – the Canadian dollar – breaching the parity for the first time since February 27. During the morning session the pair traded in a narrow range 0.9991-1.0020. Today the data from the United States may show employment in the nation’s nonfarm private business sector increased by 210000 in February, economists say before ADP releases its figures. Euro The single currency fell under pressure against the US dollar and the Japanese yen after the data showed the euro area’s gross domestic product shrank by 0.3% in the fourth quarter of 2011 from the previous three months. The European Union’s statistics office also reported that exports fell by 0.4% in the same period after a 1.4% gain, while household spending dropped by 0.4% and investment decreased by 0.7%. The euro depreciated to a three-week low against the greenback (1.3102) and weakened to a two-week low against the yen (105.64). Tomorrow the European Central Bank is scheduled to announce its interest rate decision. The Bank is expected to leave the main refinancing rate at 1%. Australian Dollar The aussie was among the worst performing currencies against the greenback this week. The Australian currency fell from 1.0739 on Monday to 1.0509 today versus the US counterpart, touching the lowest level since January 25. Investors were disappointed after a report showed the nation’s economy expanded by less than economists predicted. The Bureau of Statistics reported today that Australia’s GDP increased by 0.4% in the fourth quarter of 2011 from the third quarter, while economists on average predicted a 0.8% gain. Yesterday the Reserve Bank of Australia left the benchmark interest rate unchanged at 4.25%, suggesting the Australia’s economic growth remains “close to trend”. Later in Asian trading hours the aussie regained some ground toward 1.0570 against the greenback. Tomorrow the data may show the unemployment rate increased in February from 5.1% to 5.2% and the economy added only 5000 new jobs after adding 46300 in January.