Dollar improves as positive US data expected

Published: 12 Aug at 11 AM Tags: Euro, Dollar,

The US dollar has recovered against a number of other major currencies after dipping at the end of last week. On Friday the greenback fell against the yen, but poor Japanese economic data has resulted in some recovery. The dollar is up 0.5 per cent against its Japanese rival to 96.79 yen. Last Thursday the dollar hit a seven-week trough of 95.81.

The dollar’s continued recovery will depend on data due from the US this week including retail sales figures on Tuesday which most analysts expect to be positive.

Barclays Capital FX strategist, Chris Walker, said US recovery was likely to continue to be strong during this quarter and expects the currency to appreciate over the coming two weeks.

Although Japan’s economy has grown for the third quarter in a row, growth of 2.6 per cent was weaker than expected between April and June. More disappointing data could start to put pressure on the markets which could lead to increased interest from speculators in the safe haven yen.

However if the Japanese central bank decides to loosen monetary policy the currency could come under renewed pressure. A warning at the weekend that Greece could need renewed financial aid as early as the beginning of 2014 by the Bundesbank saw the euro drop 0.2 per cent to $1.3308.