Dollar up as data indicates US economic recovery

A batch of broadly positive data coming out of the US has seen the dollar recover. The strong house price figures, and a rise in business spending, support the Federal Reserve’s view that the US economy is firmly on the road to recovery. Fed chairman Ben Bernanke recently announced that the central bank could begin reining in its policy of bond-buying. This could start to happen before the year is out if data continues to remain positive.

Earlier this month the US dollar hit a low of 93.75 yen. This week the greenback has pulled back over the 98 yen mark from 96.95. The dollar index is up 0.4 per cent from 82.241 to 82.680.

Signs that the European Central Bank has no intention of following the Fed caused the euro to fall from $1.3151 to $1.3075. The central bank’s president, Mario Draghi, said the current accommodative monetary policy would not be brought to a close any time soon.

The Australian dollar is still struggling, although it has inched away from $0.9148, its lowest level in 33 months. The Aussie is currently worth $0.9263. The commodity currency is likely to find some support after China’s central bank attempted to buoy market confidence by saying that it will provide money to institutions that require it.

China is Australia’s number one export market and any slowdown in the Asian nation’s economy is bad news for the Aussie dollar.