US dollar higher despite mixed news; euro gains on yen

US dollar higher despite mixed news; euro gains on yen

Story link: US dollar higher despite mixed news; euro gains on yen

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The US dollar was stronger on Tuesday on comments by the president of the Kansas City Federal Reserve and the Chicago Fed’s president which indicated that more interest rate hikes are forthcoming in order to keep interest rates in check. However there were mixed signals on the issue as Ben Bernanke, the head of President George W. Bush’s Council of Economic Advisors and a possible successor to Fed chairman Alan Greenspan, said that inflation is well under control and that the administration can still reach its goal of halving the budget deficit by 2009.

Meanwhile, a survey showing that US consumer confidence was off significantly in September didn’t seem to make much difference to the dollar as the drop-off was seen as a temporary decline caused by Hurricane Katrina.

The dollar was up 0.2 percent to $1.2013 in relation to the euro, while it gained 0.4 percent to $1.7674 versus sterling, an eight-week low. The greenback was up by 0.8 percent to ¥113.28 against the yen.

The euro was helped some by the release of the latest Ifo business sentiment index in Germany. The index rose from 94.6 in August to 96 in September even though it had been expected to decline.

The euro gained 0.7 percent to ¥136.07 in relation to the yen.

Elsewhere, the New Zealand dollar fell 0.8 percent to NZ$1.474 in relation to the US dollar on a record trade deficit of NZ$1.1 billion. The nation’s trade deficit had been forecast to be only NZ$834 million.