Poor Economic Data & Rising Commodities Weaken US Dollar

The US dollar slipped today against the commodity currencies on the unfavorable macroeconomic reports from the US and on the rally of the commodities.

The S&P/Case-Shiller Home Price index posted an annual decline in October by 0.8 percent, compared to the expected reading of 0.1 percent. The Conference Board Consumer Confidence Index decreased to 52.5 in December after rising to 54.3 in November. The predicted value was 56.2. The poor economic data makes the traders to believe that the Federal Reserve would keep the interest rates low for an extended time.

The US currency dropped not only because of its inherent weakness, but also because of the stronger commodities across the board, which spurred the demand for the commodity currencies. The Reuters/Jefferies CRB Index of raw materials gained 0.7 percent. February futures for delivery gold jumped as much as $21.40 (1.6 percent) to $1,404.30 on COMEX.

AUD/USD traded near 1.0103 as of 19:37 GMT today after it opened at 1.0044 and reached the intraday high of 1.0152. NZD/USD traded at 0.7548, following the opening at 0.7497 and advancing to the intraday high of 0.7583. USD/CAD traded at about 0.9996 after the currency pair opened at 1.0065 and touched the intraday low of 0.9974.

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