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Forex - Dollar gains on mixed U.S. data, European economic woes

ForexDec 07, 2012 04:02PM ET
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This article has already been saved in your Saved Items - A strong November jobs report wasn't strong enough to entice investors out of the dollar and into higher-yielding asset classes on Friday.

Weak consumer sentiment figures in the U.S. and disappointing data in the U.K. and Germany dampened appetite for risk and kept investors parked in the safe-haven U.S. currency.

In U.S. trading on Friday, EUR/USD was down 0.34% at 1.2927.

In the U.S. earlier, the Bureau of Labor Statistics reported that the economy added a net 146,000 nonfarm payrolls in November, up from a downwardly revised 138,000 increase during October.

The headline unemployment rate fell to 7.7% in November from 7.9% in October, surpassing market calls for the figure to remain unchanged.

Analysts were expecting the economy to add only 93,000, though Superstorm Sandy inflicted less damage to the broader labor market than anticipated for November.

The dollar remained attractive after the Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to a seasonally adjusted 74.5 for December from 82.7 in November, missing analysts' calls for an 82.4 reading.

The dollar also saw demand after Germany's Bundesbank slashed the country's 2013 growth forecast to 0.4% from a 1.6% prediction made in June.

The German central bank added the country's economy will grow 0.7% this year, down from its previous forecast of 1%.

Separately, official data revealed that industrial production in Germany contracted 2.6% in October, well beyond market calls for a 0.5% decline and off from a 1.3% decline the previous month.

In the U.K., official data revealed that manufacturing production dropped 1.3% in October, far more than an expected 0.2% decline and much softer than a 0.1% rise the previous month.

Industrial production in the U.K. declined unexpectedly in October, falling 0.8% after a 2.1% drop the previous month. Analysts had expected industrial production to rise 0.7% in October.

The dollar also saw demand amid U.S. fiscal uncertainty as well.

Republican lawmakers and the Democratically controlled White House continue to negotiate a 2013 fiscal framework.

Failure to reach a deal will allow tax breaks to expire in January at the same time deep spending cuts are due to kick in, a combination known as a fiscal cliff, and failure to avoid it could tip the U.S. economy into a recession next year.

Earlier on Friday, House Speaker John Boehner, an Ohio Republican, said both sides had made no significant progress during budget talks.

The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.10% at 1.6036.

The dollar was up against the yen, with USD/JPY trading up 0.05% at 82.44 and up against the Swiss franc, with USD/CHF trading up 0.20% at 0.9342.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD trading down 0.07% at 0.9908 AUD/USD up 0.02% at 1.0489 and NZD/USD trading down 0.03% at 0.8326.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.22% at 80.41.

Forex - Dollar gains on mixed U.S. data, European economic woes

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