The dollar strengthened against its peers today after solid US industrial production data supported the dollar along with figures released out of Japan which revealed that Japan’s economy is suddenly now in a recession for the last quarter of the year. Data revealed that US industrial production increased by 0.2% for October matching forecasts. Another report showed that the Fed’s manufacturing index jumped to 10.2 in November from 6.2 in October while pundits had forecast an increase to 11.1 for this month.


The euro weakened against the dollar following the release of Germany’s Bundesbank’s monthly report which cautioned that the prospect for growth in Germany’s economy will continue to be poor in the coming months. Earlier in the session figures highlighted a 9% increase for euro zone exports year-over-year in September ramping up the trade surplus to 17.7 billion from 15.4 in August.


The pound weakened against the dollar with the pair trading at near 14 month lows following data which highlighted a drop in UK house prices while comments made by the Bank of England last week continued to put pressure on the pound. UK house prices fell by 1.7% this month following a 2.6% increase in October. The Bank of England predicts a 3 year timeline in order to reach its 2% target for inflation while inflation will probably drop under 1% within the next 6 months.


The yen weakened against the dollar with the pair trading at 7 year highs breaking its 117 handle before giving back some gains. Economic data revealed that in the 3rd quarter Japan’s GDP shrunk by an annualized rate of 1.6% after having dropped 7.3% in the 2nd quarter. Growth of 2.3% was expected by analysts. The surprisingly weak data intensified deteriorating global outlook.


The Canadian and Australian dollars weakened while the New Zealand dollar strengthened against the US dollar. The dollar advanced against the Canadian dollar despite the release of discouraging data on manufacturing conditions in New York. Figures released out of Canada revealed that foreign securities purchases increased in September by C$4.37 billion which was much less that the forecasted increase of C$11.32 billion.


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