Posted: 19 June 2009 0545 hrs
NEW YORK: The US dollar recouped early losses and swung higher against the other main currencies on Thursday as the market outlook shifted on a surprisingly strong report on US leading economic indicators.
An announcement by the Swiss National Bank that it would take "firm action" to prevent franc appreciation prompted reports of intervention in the currency markets, which appeared to help the US unit, traders said.
At 2100 GMT, the euro was trading at 1.3901 dollars, from 1.3943 dollars in New York late on Wednesday. At one point, the euro broke above 1.40 dollars but then fell back.
Against the Japanese currency, the dollar rose to 96.55 yen from 95.71 yen on Wednesday.
The dollar got some early support as "weak equity markets overseas enticed traders to seek the safe-haven benefits of the dollar," said Bob Kozak at Alaron Trading.
But the greenback later appeared to benefit from better-than-expected economic news, offering support to notion of a recovery taking root in the United States.
The Conference Board said its May index of leading economic indicators, a measure of economic conditions in the coming months, rose 1.2 percent from April, beating forecasts for 1.0 percent.
The index, which had been on a downward trend since hitting a peak in July 2007, "has risen sharply in the past two months amid widespread strengths among its components," the Conference Board said.
"Two consecutive months now of strong gains in the leading indicators is the strongest evidence to date supporting the 'green shoots' rally," said Michael Woolfolk at Bank of New York Mellon.
Other reports showed a stronger-than-expected reading on a Philadelphia Federal Reserve survey on regional manufacturing and a report roughly in line with expectations on weekly jobless claims, but which offered hints that some of the unemployed were finding jobs.
Meanwhile the market mulled the Swiss National Bank announcement to keep interest rates unchanged but to work to dampen appreciation of the Swiss franc. This prompted some speculation of currency market intervention.
The Swiss authorities "said they will take 'firm action' to prevent franc appreciation as they are an export dependent country," said Mary Ann Hurley at DA Davidson & Co.
This could help the dollar since some traders are "using the Swiss franc as a proxy for the euro," said Brown Brothers Harriman analysts.
The analysts said the British pound was hurt by "much weaker than expected retail sales and the largest drop in business lending in nine years."
In late New York trade, the dollar stood 1.0861 Swiss francs after 1.0795 on Wednesday.
The pound was at 1.6331 dollars from 1.6401. - AFP/de
From ChannelNewsAsia.com; see the source article here.
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