Dollar rises on positive data

Published: 25 Dec at 8 AM Tags: Euro, Dollar,

The dollar has moved higher because economic data coming out of the US appears to support the recent decision by the Federal Reserve to rein in its quantitative easing programme. However, market trading has been thin because of the Christmas holiday. The US currency gained 0.1 per cent to 104.29 yen.

The euro is currently flat against the yen at 142.55 yen. Both the green back and the single currency are trading close to five year highs against their Japanese counterpart.

The euro is also steady against the dollar at $1.3679. Data released earlier this week showed that during November orders for US manufactured goods were up and that business spending also increased. The data suggests that the US economy is on track to recovery.

However, with many traders away for the holiday there is unlikely to be much market reaction before the end of the week or the beginning of next week. Last week the Fed announced that it would be trimming its massive $85 billion monthly bond buying strategy by $10 billion.

This reduction in stimulus is to be offset by short-term maintenance of near zero interest rates even after the jobless rate dips below 6.5 per cent.