The dollar is little changed against its major rivals Tuesday, turning in a modest improvement. The weaker than expected U.S. economic reports seem to have had little effect. Meanwhile the better than expected Spanish bond auction and comments from the IMF have fueled a rally in stocks.
The International Monetary Fund raised its global growth projections for this year and next on Tuesday, citing improvements in the U.S. economy and emerging economies. However, the Washington-based lender expects growth to be relatively weak, as risks remain elevated, especially from Europe. The geopolitical uncertainties linked to the oil market also weigh on the outlook, the IMF's biannual World Economic Outlook report said.
The IMF raised the growth outlook for 2012 to 3.5 percent from the 3.3 percent predicted in a January update to the WEO report. In a September report, the lender forecast 4 percent growth for this year. The U.S. economy is seen growing 2.1 percent this year, better than the previous forecast of 1.8 percent. Meanwhile, the Eurozone is expected to shrink 0.3 percent, which is narrower than the 0.5 percent drop seen previously.
The dollar has rebounded slightly from a 2-day low of $1.3171 versus the Euro, back to around $1.3125.
Eurozone inflation overshot its flash estimate in March due to rising energy prices, final data from Eurostat showed Tuesday. Inflation for March was revised up to 2.7 percent from 2.6 percent. The inflation rate has been 2.7 percent since December 2011.
Investor confidence in Germany improved unexpectedly in April and for a fifth consecutive month, revealing the strong positive sentiment among businesses over the country's economic prospects despite the lingering debt woes. A survey by the Mannheim-based Centre for European Economic Research (ZEW) showed Tuesday that the indicator for economic expectations rose to 23.4 in April, the highest since June 2010, from 22.3 in March. Economists had expected the index to fall to 19.
The buck has also recovered slightly from a 3-day low of $1.5970 versus the pound sterling, back to around $1.5930.
U.K. inflation increased for the first time in six months in March driven by higher food and clothing prices, denting hopes of another round of quantitative easing. Annual inflation rose unexpectedly to 3.5 percent from 3.4 percent in February, the Office for National Statistics revealed Tuesday. Economists had expected the annual rate to hold steady at 3.4 percent. Inflation continues to hover above the Bank of England's 2 percent target.
The greenback has also rebounded from the month and a half low of Y80.284 it reached yesterday versus the Japanese Yen, back to around Y80.75.
Japan's consumer confidence increased in March, a monthly survey by the Cabinet Office revealed Tuesday. On a seasonally adjusted basis, the consumer confidence index rose to 40.3 in March from a revised reading of 39.9 in February. Economists expected the index to rise to 40 from February's initial reading of 39.5.
Industrial production in Japan declined 1.6 percent month-on-month in February, final data from the Ministry of Economy, Trade and Industry showed Tuesday. This compares to the preliminary reading of 1.8 percent fall.
New housing construction in the U.S. dipped unexpectedly in the month of March, but an equally unexpected jump in building permits offers hope for the future of the beleaguered housing market. According to figures released Tuesday by the Commerce Department, new privately-owned housing starts came in at a seasonally adjusted annual rate of 654,000 in March, a 5.8 percent drop from February levels.
Additionally, the February figures were revised down slightly from the 698,000 rate initially reported to 694,000. The March rate of new housing starts comes in well below the expectations of most economists, who had predicted a slight uptick to a rate of 700,000.
Industrial production in the U.S. unexpectedly came in unchanged for the second consecutive month in March, according to a report released by the Federal Reserve on Tuesday, with a drop in manufacturing output offsetting a notable increase in utilities output. The report showed that industrial production remained unchanged in March after coming in flat in February. Economists had been expecting production to increase by about 0.3 percent.
by RTT Staff Writer
For comments and feedback: email@example.com