Dollar Recovers on Positive Fundamentals

The US dollar climbed today after the positive macroeconomic reports eased concerns that the US economy is weakening and allowed the currency to recover from the recent slump.

The US import and export prices both rose 0.2 percent in May. The import prices increased as higher non-fuel prices outweighed decline of fuel prices. The deficit of the federal budget was $57.6 billion last month, compared to the median forecast of $123.2 billion. Virtually all other reports this week were also positive, bringing a relief for markets after several weeks of discouraging economic data.

Next week can extinguish the renewed optimism about the US economy. Analysts predict that the government report will show a slowdown of the inflation to 0.2 percent from 0.4 percent. Forecasts about other reports are also pessimistic for the most part.

EUR/USD dropped to 1.4343 from 1.4508 today as of 20:51 GMT. GBP/USD went down to 1.6225 from 1.6364. USD/JPY traded near its opening level of 80.32 after the decline to 79.96.

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