Depressed dollar weakens Poor U.S. Economy Data

Weak U.S. economic data drove the dollar weakened versus the currency with the prospect of more attractive interest rates.  Indicators of the U.S. manufacturing sector and the property which was released last night showed the actual numbers are lower than expected, giving rise to doubts about when the Federal Reserve will initiate a strategy solutions.

U.S. Leading Indicators April, for the first time since June 2010, has decreased.  Next, the home sales data from the hand into two and so on down to 5.05 million annual units.  While the manufacturing sector index from the Philadelphia Federal Reserve district in May fell significantly to 3.9 versus 18.5 in the previous April.

The data confirmed expectations that the Fed would maintain an extra loose monetary policy, with interest rates very low, for a longer period of time.

Chicago Fed district governor Charles Evans said that the rising prices of food and fuel is only temporary and therefore the Fed must maintain substantial monetary accommodation for a while.

On the other hand, members of the Executive Council of the European Central Bank (ECB), Gertrude Tumpel-Gugerell said that the ECB should end the procedure of non-standard monetary policy in line with the improving financial condition.  The statement is a signal to the ECB raising interest rates.

Despite concerns about the debt crisis of the Euro zone on the one hand put a halt to the strengthening of the euro, the fact that the ECB was still likely to raise interest rates at least once more this year on the other hand put a halt to the weakening euro against the dollar.

The ECB last month raised its own interest rates by 25 basis points, the first time since July 2008.

Against the dollar, the euro rose about 0.4 percent closing at 1.4307 in late trading session Thursday.

Similarly versus sterling, the dollar closed down almost 0.4 percent at 1.6227.  While the Australian dollar closed down about 0.3 percent stronger at 1.0665 against the U.S. dollar.

Even the weak GDP data showing Japan's economy slumped back into recession, is unable to lift the dollar.  Anual Japanese GDP contracted 3.7 percent in the first quarter of 2011, as the impact of the earthquake and tsunami that struck Japan last March.  Japan has recorded 3 times in recession in a decade.

However, it could weaken the dollar until the lowest range of 81.45 before closing at 81.65 yen at the end of the session.