The US dollar gained this week as positive macroeconomic data from the United States increased the attractiveness of the currency, even as the risk sentiment turned positive. Hurricane Sandy sent markets in turmoil at the beginning of the week, but trading rather quickly returned to normality.
There were quite a few positive reports from the USA, though many were postponed because of the cyclone. Among positive data were reports about housing, employment and others as well. They confirmed the safety of the dollar.
Often positive macroeconomic data boosts traders’ confidence, weakening safer currencies, including the dollar. This week, though, the opposite has happened. Europe was partially responsible for that as the data from the eurozone was negative, especially considering unemployment. Eurozone unemployment rose to 11.6 percent, while Spanish the unemployment rate reached the record of 25 percent.
The Japanese yen also weakened against the greenback as the Bank of Japan performed monetary easing. Initially, the size of stimulus was considered to be too small and the Japanese currency retained its strength. But later the yen retreated on the view that the central bank will continue easing.
EUR/USD dropped from 1.2941 to 1.2829, the lowest weekly close since September. GBP/USD declined from 1.6105 to 1.6015, following the rally to 1.6173. USD/JPY advanced from 79.60 to 80.41, the highest close since June.
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