Dollar drops on disappointing data

Published: 19 Feb at 8 AM Tags: Euro, Dollar,

The US dollar has slumped to its lowest level in seven weeks. Poor economic data and the heavy selling of US assets by foreign investors have had a negative effect on the greenback and helped push the euro. The single currency is hovering around $1.3761, its highest level in nearly seven weeks.

The dollar index stands at 79.985 as poorer than anticipated housing and manufacturing data could prompt the Federal Reserve to ease its tapering plans. Figures produced by the US Treasury show that during December $120 billion worth of US assets were sold by overseas investors.

On the other side of the pond the eurozone has been enjoying inflows into stocks. The difference in equity flow could help support the euro. However, some analysts believe the dollar will strengthen again on improved economic data.

The euro dropped 0.1 per cent against the yen to 140.74. The dollar also dropped against its Japanese rival by 0.1 per cent to 102.26 yen.

The Fed is due to release its January policy meeting minutes which saw the central bank cut its bond buying programme by $10 billion per month. As long as there is steady improvement in the US economy, Fed Chairman Janet Yellen has indicated that she will continue to taper the bank’s bond purchases.