Dollar Stays Near Yearly Lows Amid Encouraging Economic Data

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The dollar found its footing on Thursday after setting a new yearly low versus a basket of major currencies.

Speculation that a recent plunge was overdone helped the beleaguered buck steady, but optimism about the health of the global economy prevented it from putting much of a dent in its losses against the the euro and loonie.

Traders took in another round of relatively encouraging economic data. Housing starts rose, and the number of people filing first-time unemployment claims slipped again last week, indicating that layoffs are continuing to ease.

The dollar slipped to 1.4766 versus the euro in early dealing, its lowest since last September. After firming up around mid-day the buck moved back toward that mark.

The dollar dropped to a nearly one-year low versus the loonie, falling through support to C$1.0604.

Canadian consumer inflation dropped in August from the previous year as prices at the pump fell, according to data released by Statistics Canada on Thursday. However, excluding volatile energy costs, consumer prices were higher on an annual basis.

The dollar improve a bit to 91.20 versus the yen, and gained modestly to 1.6450 versus the sterling.

The Bank of Japan decided to leave the key interest rate unchanged and raised its economic assessment Thursday.

The BoJ decided by a unanimous vote to maintain the uncollateralized overnight call rate at 0.1%. The last change in the rate was a 0.1% cut in interest rates at the December 2008 meeting.

In economic news from the US, the number of people filing first-time unemployment claims slipped again last week, indicating that layoffs are continuing to ease.

Still, other data suggest that people are continuing to have problems finding new jobs once they have been laid off. While firings are continuing to slow, signs are that hiring remains sluggish.

With new construction of multi-family homes showing a significant rebound, the Commerce Department released a report Thursday morning showing that housing starts rose to their highest level in nine months in August.

The report showed that housing starts rose 1.5 percent to an annual rate of 598,000 in August from the revised July estimate of 589,000. With the increase, housing starts rose to their highest rate since coming at 655,000 in November of 2008.

(Market News Provided by RTTNews)