Forex - US dollar higher against major currencies on positive data

Forex - US dollar higher against major currencies on positive data

	Published : Mon, 15 Oct 2007 01:20 By : Agencies Print this Story

SYDNEY (Thomson Financial) - The US dollar extended gains against major currencies in midmorning trade Monday after surprisingly strong retail sales released in the US on Friday signalled the world's biggest economy is in better shape than previously thought.

'Evidence that US consumer spending was holding up further eased lingering fears of a recession,' National Australia Bank head of currency strategy John Kyriakopoulos said.

Retail sales rose 0.6 percent in September from August compared with the market's consensus forecast for a 0.3 percent increase, reducing the chances of another rate cut later this month.

At 10.00 am (0000 GMT), the US dollar was buying 117.645 yen compared with 117.60 in late New York trade on Friday. The euro was lower at 1.4167 from 1.4180.

John Noonan, an analyst at Thomson IFR, said investors' appetite for risk is so strong at the moment that they respond positively to good and bad news.

This is because investors believe the Federal Reserve will come to the rescue with an interest rate cut if the US economy looks like slipping into recession.

Investors also believe the Asian economies led by China and India will provide 'the growth engine for the global economy', reducing the impact of a slowdown in the US.

'That is why we have seen markets rally on bad US news, as it raises the possibility of more market-positive Fed action. When the US data is stronger, as it was with Friday's retail sales, the market responds positively even though the chances of Fed action fades,' Noonan said.

This week investors will closely monitor speeches from several Federal Reserve officials, including chairman Ben Bernanke, for clues on further interest rate movements.

Meanwhile, the Australian dollar may come under pressure after the Prime Minister John Howard yesterday called a federal election for November 24. The Reserve Bank is due to meet on November 6, in the midst of the election campaign, and some analysts believe it may hold interest rates to avoid entering the political fray.

The Australian dollar traded as high as 90.53 US cents on Friday on strong carry-trade demand and better commodity prices.

Sydney at 10am (0000 GMT)

US dollar

117.645 yen

1.1849 sfr

Euro

1.4167 usd

166.645 yen

1.6786 sfr

0.6966 stg

Sterling

2.0337 usd

239.305 yen

2.41024 sfr

Australian dollar

0.9046 usd

0.4446 stg

106.39 yen

New Zealand dollar

0.774 usd

allison.jackson@thomson.com

bhx/ng

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.