Dollar Firms on Solid Economic Data

The U.S. Dollar slipped versus the safe haven Japanese Yen driven there by worried investors who fear that a Chinese credit crunch might be imminent. However, the U.S. Dollar was supported against other currencies by recent data from the U.S. which suggests that the Federal Reserve’s intent to curtail its asset purchase program is not misplaced. Residential housing prices jumped to a level not seen in more than seven years and durable goods orders also rose unexpectedly; meanwhile the outlook for business spending improved for the third month in a row.

As reported at 1:11 p.m. (JST) the USD/JPY pair was trading at 97.79 Yen, slipping from an earlier session high of 98.23 Yen but stayed above Tuesday’s low. The U.S. Dollar Index, the gauge of the greenback’s relative power versus its key rivals, gained 0.1% to trade at 82.626 .DXY, slightly off the session high but well above the low struck yesterday when the Index hit 82.241 .DXY. The EUR/USD pair was trading lower at $1.3063 and analysts believe that the pair’s gap is likely to widen in the mid-term as the two central banks take opposite positions on stimulus; Mario Draghi the head of the ECB recently said that the bank was not yet ready to reconsider its loose monetary policy.