ECB Rate Hike Likely After Inflation Data Supports Monetary Tightening
Problems Mount against British Pound; Short-covering Supports Euro
Sovereign debt issues in Greece and a poor jobs report in the U.S. helped the Dollar finish better against most major currencies. Throughout the day, investors seeking a safe harbor supported the Greenback. Early in the session the Dollar got a boost when rumors spread that the S&P Corp. was considering a cut in Greece’s debt rating.
U.S. investors drove stock indices higher following better than expected housing starts, industrial production and import price reports. Trading was light and there was very little follow-through to the upside following a strong early morning session. Traders were able to hold the indices steady following the FOMC report.
The U.S. Dollar rallied following the release of a better than expected existing home sales report and never relinquished its gains. The rise in the Dollar following the release of good economic news is another sign that investors are returning to watching traditional fundamentals for direction. Gains are being limited this week because of thin holiday trading.