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Broadly Improving Economy Sends US Dollar Higher

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Broadly Improving Economy Sends US Dollar Higher

The US dollar advanced broadly on Friday, extending its weekly gains to nearly 1 percent amid signs the US economy continued to strengthen at the end of 2013.

Economic data from the Commerce Department and Federal Reserve supported the view that the world’s largest economy continued to gain traction in December. US industrial output last quarter rose at the fastest pace in three-and-a-half years a sign production volumes in US factories were firing on all cylinders. Although groundbreaking for new housing projects fell nearly 10 percent last month, 2013 was the strongest year for new housing starts since 2007.

The dollar index, which gauges the dollar’s performance against six of its major peers, rose 0.4 percent to 81.23. The euro fell 86 pips against the dollar, hitting 1.3529 US in the late afternoon trade. The British pound gained 62 pips to 1.6414 US after retail sales posted a nine-year high in December, the Office for National Statistics reported today.

Meanwhile, the USDJPY pair experienced some downside after Japan’s Coming of Age festival kept market participants offline. The dollar weakened 0.1 percent against the Japanese currency, falling back to 104.27 yen.

In North America, the USDCAD continued to eye 1.10, falling short by around 17 pips. The pair edged up 42 pips to trade at 1.0975 in the late afternoon session.

The greenback continued to strengthen against the Australian dollar, which is still reeling from a weak jobs report. Australian employers shed 31,600 full-time jobs last month, official data from the Bureau of Statistics showed yesterday. The AUDUSD pair fell another 48 pips on Friday to trade at 0.8770. The pair has lost nearly 3 percent since Monday.

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