FX round-up: Dollar beefs up as earnings disappoint
Mon 22 Oct 2012
LONDON (SHARECAST) - The dollar strengthened against major currencies on Friday as investors turned to its safe haven appeal following a raft of disappointing update from some of North America's biggest companies.
Bellwethers such as Microsoft, McDonald's and General Electric issued results below market expectations. As a result market confidence soured and traders swiftly turned to the safety of the greenback.
The ICE dollar index, which measures the US unit against a basket of six major currencies, advanced to 79.628 from 79.355 on Thursday.
The dollar was also boosted by a weaker than expected US home sales report. The latest data showed existing homes sales fell 1.7% in September to a seasonally adjusted annual rate of 4.75m compared to expectations of a rate of 4.8m.
The data poured cold water on recently encouraging data from the US.
While the dollar made strong progress, the euro's risk status fell out of favour. The single currency traded at $1.3025 compared with $1.3071 the previous session.
Uncertainty about Spain also continued to hamper the euro on Friday as traders showed their disappointment about lack of progress on a Spanish bailout request.
Instead the European Union Summit issued just a widely anticipated agreement to set up one manager to overlook Eurozone banks.
Against the yen, the dollar bought ¥79.31 from ¥79.25 previous session as the safety of the yen increased. The euro fell ¥103.25 after hitting a five-month high on Thursday.
Sterling changed hands at $1.5999, down from $1.6051 on Thursday but came off intra-day lows after better than expected UK public borrowing figures.