Forexpros – The dollar traded mixed to higher against most major global currencies on Thursday, as investors brushed off growing talk the Federal Reserve is moving closer to stimulating the U.S. economy with monetary easing tools, which would normally weaken the greenback
In Asian trading on Thursday, EUR/USD was down 0.16% at 1.2137, erasing earlier gains on talk European policy makers may give their rescue fund a banking license to better assist debt-ridden southern European nations.
Weeks of slumping U.S. economic indicators, including weaker-than-expected monthly jobs reports, poor growth figures and other data have many in the markets forecasting Federal Reserve intervention.
Fed stimulus tools such as quantitative easing, which are large-scale asset purchases from banks that aim to keep interest rates low, weakened the dollar in U.S. and European sessions though it later rebounded in Asian trading amid bargain hunting.
The U.S. will release second-quarter gross domestic product figures later this week, and investors were on the sidelines ahead of time, expecting Thursday’s strengthening spurt to be short-lived.
Meanwhile housing, which threw the U.S. into a recession several years ago, continues to weigh on its recovery.
The U.S. Census Bureau reported earlier that new home sales fell by 8.4% to a seasonally adjusted 350,000 units in June, worse than expectations for a decline of 2.6% to 372,000.
New home sales for May were revised up to 382,000 units from a previously reported 369,000.
Meanwhile in Germany, the Ifo research institute reported its Business Climate Index for the country fell to 103.3 in July, the lowest level since June 2010, from a reading of 105.2 in June.
Markets were expecting a 104.7 reading.
Elsewhere in Europe, the yield on Spanish 10-year bonds rose earlier to a euro-era high of 7.71%, well above the 7% threshold considered unsustainable by the markets on fears the country is becoming unable to finance itself though it did ease up later.
Europe did see some positive news, when a key European policymaker called on giving the continent’s rescue fund, the European Stability Mechanism, a banking license.
A banking license would allow the fund to borrow from the European Central Bank and better assist debt-ridden countries like Spain.
Concerns have persisted the fund’s EUR500 billion in reserves won’t be enough to aid larger countries like Spain or Italy.
Ewald Nowotny, a European Central Bank council member, said he saw merits to giving the bailout fund a banking license, fueling demand for risk before investors rushed back to the dollar amid bottom fishing.
The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.12% at 1.5479.
The dollar was down slightly against the yen, with USD/JPY trading down 0.02% at 78.15, and up against the Swiss franc, with USD/CHF trading up 0.12% at 0.9892.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD flat at 1.0154, AUD/USD up 0.14% at 1.0322 and NZD/USD up 0.32% at 0.7916.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.10% at 83.75.
Later Thursday, the U.S. will release official data on durable goods orders, a leading indicator of production, as well as data on pending home sales and initial jobless claims.
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