US dollar exchange rates (Currency:USD) continues to receive support from strengthening US economy; IP data not as bad as first thought

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Category: US Dollar Exchange Rate

Published on Thursday, 16 February 2012 12:02

Written by Will Peters

US dollar exchange rates are enjoying a strong days trade in line with weaker equity and commodity markets; the conditions have prompted the familiar uptake of USD as investors look to mitigate capital losses.

As such, the latest key US dollar (Currency:USD) spot rates are:

The euro dollar exchange rate is 0.51% lower on the day at 1.3. The pound dollar exchange rate is 0.09% lower at 1.5677.

Of course a lot of recent support for the US dollar has come courtesy not only of risk plays, but also strong US economic performance.

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Yesterday we saw that industrial production figures came in flat in January, well below consensus at 0.7%.

Despite these disappointment, Barclays Capital have put a positive spin on the figures:

"The downside surprise fully reflected declines in the volatile mining (-1.8%) and utilities (-2.5%) components. Manufacturing output rose 0.7%, in line with our forecast. This was accompanied by upward revisions to December (to 1.5% from 0.9%) and November (to -0.2% from -0.4%), signaling a strong end to Q4 with momentum continuing to build in Q1 - indeed, on an annualised q/q basis manufacturing output is now reported to have risen 5.1% in Q4 (previously 3.9%) and, based on the January number, is tracking growth of 10.5% in Q1."

Vehicle production made the largest single contribution to manufacturing growth in January, rising 6.8%.

Excluding this output was up 0.3%. By industry group the gain in autos and other durable goods such as electronics (1.4%) and machinery (2.2%) more than offset a decline in non-durable goods (-0.2%).

However, the latter largely reflected a sharp drop in petroleum output (-2.3%), other non-durable components, such as apparel (1.9%) and chemicals (0.3%) struck a stronger tone.

"All in all, a notably stronger report than the headline IP number suggests, with a stronger end to Q4 for manufacturing output than previously estimated and momentum building into Q1, particularly in more cyclical areas such as vehicles and technology," says BarCap.