Tuesday, December 20, 2005

 

Housing Data Gives Greenback A Boost

This mornings economic news was bad news for bonds and good news for the US dollar. "The dollar climbed the most in six weeks against the euro and advanced versus the yen as a report showing gains in U.S. housing starts reinforced speculation the Federal Reserve will raise interest rates at least twice more."

"'The housing data was stronger than expected,' said Niels From, a currency strategist n Duesseldorf, Germany. 'The Fed is not done hiking rates, and that should favor the dollar.'"

"'The push the dollar is getting is partly on the back of stronger-than-expected housing data,' said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. 'It's not just that housing starts are up. Permits were expected to fall.'"

"'Prospects for widening rate differentials between the U.S. and economies such as Japan and Europe helped the dollar this year and will continue to do so,' said Osamu Takashima, chief currency and treasury division analyst at Bank of Tokyo Mitsubishi Ltd., a unit of the world's biggest lender by assets."

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