Friday May 18, 2007 - 10:43:49 GMT
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INVESTICA Ltd - www.investica.co.uk
Industrial hopes support dollar
Increased optimism over a recovery in the manufacturing sector and evidence of a firm labour market will help support the dollar in the short term.
The Euro was unable to push back above 1.3550 on Thursday and weakened to lows around 1.3480 in US trade before settling close to 1.3495. The dollar held firm at 1.3490 in early Europe on Friday in subdued trading.
US jobless claims fell to 293,000 in the latest week from 298,000 previously. As well as being the second successive week below the key 300,000 level, this was the fifth successive weekly drop in claims which will help support confidence in the labour market.
The Philadelphia Fed survey increased to 4.2 in May from 0.2 in April, the highest figure for 2007. Within the data, there were strong readings for employment and orders which will boost confidence. Any durable recovery in manufacturing and a firm labour market would make it much easier for the economy to cope with an extended downturn in the housing sector.
US Treasury yields pushed above the 4.70% level which will stem any short-term dollar selling. The US currency will still find it difficult to secure strong buying unless there are negative Euro-zone developments.
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