Strong economic data boosted the US dollar’s foreign exchange rate today and supported the American stocks market, outweighing worries about a possible downgrade of global banks by Moody’s and persistent doubts that another Greek bailout would be agreed.
The US dollar hit its highest level against the Japanese yen since late October after a report showed claims for unemployment benefits in the United States unexpectedly fell near a four year low last week.
The US dollar also hit a three week high against the euro as growing acrimony between Athens and euro-zone creditors increased fears that Greece mail fail to secure enough funds to avert a messy debt default.
Key Wall Street indexes rose on the jobless claims data and a stronger than expected increase in US housing starts for January.
“The jobless data is another brick in the wall, another example of the fact that slowly but surely – slower than we’d like – our economy is bouncing back,” said Mike Shea, a managing partner and trader at Direct Access Partners LLC in New York.
“Still, global macro issues are always going to trump what’s going on in the U.S., at least this global issue (Europe).”
The Dow Jones industrial average .DJI gained 55.70 points, or 0.44 percent, to 12,836.65, while the Standard & Poor’s 500 Index .SPX was up 3.35 points, or 0.25 percent, at 1,346.58. The Nasdaq Composite Index .IXIC was up 9.67 points, or 0.33 percent, at 2,925.50.
Shares of Morgan Stanley (MS.N) were down 1 percent to $18.75 after Moody’s said it may cut the credit ratings of 17 global banks 114 European financial institutions as the euro zone debt crisis continues to pound capital markets.
In Europe, the FTSEurofirst 300 index of top shares trimmed losses after the U.S. data but remained 0.18 percent lower. World stocks as measured by the benchmark MSCI All-Country World Index declined 0.3 percent.
Failure by euro-zone finance ministers to agree on a new bailout package for Greece kept European markets on edge, sending the euro as low as $1.29744 on trading platform EBS, its weakest since January 25. It last traded at $1.303, 0.26 percent lower against the greenback.
“To the extent that the situation in Europe remains, at least in recent days, more the overriding focus, I’m not sure this data is going to be enough to really change that current dynamic,” said Robert Lynch, head of currency strategy for the Americas at HSBC in New York.
Against the Japanese yen, the dollar was up 0.65 percent at 78.84 after trading as high as 78.94 yen, its strongest since October 31.