Dollar partly recoups losses as US consumer sentiment rises

NEW YORK (AFP) - The dollar recovered some of its losses but ended mixed Friday after data showing improvement in US consumer sentiment helped the greenback move up from a nine-month low on the euro.
The single European currency fetched 1.4573 dollars at 2100 GMT, against 1.4583 late Thursday in New York. The euro had earlier surged to a nine-month high of $1.4634.
The US currency fell to 90.64 yen, down from 91.74.
Analysts attributed the market action to lower “risk aversion,” with investors — confident in prospects for the global economy — emboldened to invest in riskier assets, such as mining assets or the euro.
But the dollar managed to firm during the course of trade Friday, boosted by news that the University of Michigan consumer confidence index had risen in the first part of September after two months of decline. The index rose to a better-than-expected 70.2 points.
“It has been a tough day for the US dollar but the stronger-than-expected consumer confidence report has helped the greenback recover,” said Kathy Lien at Global Forex Trading.
“The dollar is finally rising on good data but it remains to be seen whether the drivers for the currency market has really changed from risk appetite to economic fundamentals.” John Kicklighter, currency strategist at Forex Capital Markets, said it was unclear how far the optimism will carry. “We have seen the trend in risk appetite extend its advance and the dollar inversely maintain its bearish trajectory,” he said.
“Fear continues to dissipate and the demand for yield is steadily growing. However, you can’t point out these bullish signs without also noticing the fading momentum behind the advance.”
Jessica Hoversen at MF Global said investors may be waiting for more economic data next week before shifting positions. “You have a pretty heavy US economic calendar next week,” she said. “I think the near-term outlook for the dollar is still bearish.” She added that markets expect central banks to start looking at raising interest rates as the recovery gains momentum, which could help their respective currencies. “The question is who is going to tighten first?” she said. “If we examine the fundamentals, it doesn’t look like it’s going to be the US.”
In late New York trade, the dollar stood at 1.0376 Swiss francs after 1.0381 Thursday.
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