- POSTED: 30 Aug 2014 07:09
The dollar rose against the euro and the yen on Friday (Aug 29) as traders appeared to look past a disappointing US consumer spending report to focus on mostly brighter economic data.
NEW YORK: The dollar rose against the euro and the yen on Friday (Aug 29) as traders appeared to look past a disappointing US consumer spending report to focus on mostly brighter economic data.
A small, unexpected fall in US consumer spending in July - the first drop in six months - made little impression on the market. US data has been mostly upbeat this week, in contrast to persistent weakness in the Eurozone economy.
"The US dollar is seeing long-term sentiment start to build as economic data has improved considerably over the past few weeks," said Christopher Vecchio, currency analyst at DailyFX.
The euro sank to its lowest level in almost a year - $1.3134 - after weak Eurozone inflation data raised speculation about whether the European Central Bank would take fresh easing steps at its monetary policy meeting next Thursday.
Eurozone annual inflation slowed to 0.3 per cent in August, official data showed, raising concerns about deflation risk.
"The ECB is focused on stopping disinflation and trying to convince us all that deflation is not a threat. But this downshift in inflation clearly is not good news for the ECB or for its no-deflation-risk argument," said Robert Brusca, chief economist at FAO Economics.
Kathy Lien of BK Asset Management said that the ECB's meeting could even trump the impact of Friday's US jobs report in its impact on the euro/dollar trade.
"In no way shape or form is the ECB ready to roll out quantitative easing, but given recent economic reports, particularly from Germany, the case for additional stimulus is growing," she said.