Dollar Gains on European Woes

November 9th, 2012
in contributors

Closing the Week with Forexpros

by Forexpros Staff

The dollar rose against most major global currencies on Friday after industrial production numbers disappointed in France and Italy, while forexpros-logodoubts still remained as to when Greece may tap its next tranche of bailout funding.

In U.S. trading on Friday, EUR/USD was down 0.26% at 1.2714.

French industrial production fell 2.7% in September, way more than market calls for a 1% decline, and off from a 1.9% gain in August.

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U.S. stocks finished higher on Friday after consumer sentiment data beat expectations, hitting a five-year high.

Concerns that partisan bickering may hamper efforts to steer the country away from a fast-approaching fiscal cliff pared back gains.

At the close of U.S. trading, the Dow Jones Industrial Average rose 0.03%, the S&P 500 index was up 0.17%, while the Nasdaq Composite index was up 0.32%.

The Thomson Reuters/University of Michigan preliminary consumer sentiment index hit 84.9 for November, up from 82.6 in October.

The number beat a median forecast of 83.0.

The news sent equities gaining on sentiment that U.S. recovery will gain steam, considering consumer spending drives about 70% of the U.S. economy.

Fears that the U.S. risks falling into an avoidable recession dampened spirits in U.S. equities markets.

At the end of this year, the Bush-era tax cuts and other tax benefits expire at the same time pre-programmed cuts to government spending are scheduled to take effect, a combination known as a fiscal cliff that could send the country into recession if left unaddressed by Congress.

One sticking point lies in taxes, with the White House and Democrats in Congress arguing for tax hikes on the wealthy, a proposal many Republicans oppose.

The nonpartisan Congressional Budget Office has said that the economy could contract 0.5% in 2013 if Congress fails to steer the economy away from the cliff.

Leading Dow Jones Industrial Average performers included Boeing, up 3.21%, Caterpillar, up 1.53%, and AT&T, up 1.05%.

The Dow Jones Industrial Average's worst performers included Walt-Disney down 5.96%, Hewlett-Packard, down 1.45%, and Unitedhealth Group, down 1.01%.

European indices, meanwhile, finished mixed.

After the close of European trade, the EURO STOXX 50 rose 0.03%, France's CAC 40 rose 0.47%, while Germany's DAX 30 finished down 0.58%. Meanwhile, in the U.K. the FTSE 100 fell 0.11%.


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