North-West Financial Broker
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11 Jan - Fundamental
The dollar fell to a three-week low Monday as investors focused on strong economic data from China and bet that U.S. interest rates will remain low for some time.
What prices are doing: The dollar was down 0.8% versus the euro to $1.4521. It also fell 0.8% against the UK pound to $1.6157. Against the Japanese yen, the dollar was down 0.2% to ¥1.027.
The dollar index, which tracks the greenback against a basket of rival currencies, fell 0.3% to 76.96 from 77.47. The index is now at its lowest level since mid December.
What's driving prices: The dollar was pressured by a report that showed Chinese exports jumped 17.7% in December from the month before. The data fueled speculation that the global economy is on the mend and sapped demand for the dollar as a safe haven.
The greenback was also hurt by government figures released Friday that showed 85,000 jobs were lost in December, after 4,000 jobs were added in November.
The larger-than-expected decline in December payrolls fueled speculation that the Federal Reserve will continue to hold interest rates at historic lows near 0 percent for a prolonged period of time as the economy remains vulnerable.
Expectations for low interest rates tend to increase demand for more risky currencies such as the euro and pound.
What analysts are saying: Boris Schlossberg, head of research at GFT Forex in New York, said the surge in Chinese exports «confirmed speculation that global recovery prospects remained robust.»
»[China] remains the critical driver of global economic recovery and as long as growth prospects in China remain positive, risk FX will continue to be supported,» he said.
