Dollar up on weak European industrial output

NEW YORK - The dollar rose against the euro and other key currencies Friday after a steep decline in eurozone industrial output.

The euro fell to 1.4021 dollars in New York trading at around 2100 GMT from 1.4106 dollars on Thursday.

The dollar also climbed against the Japanese currency, to 98.40 yen from 97.60 yen.

Terri Belkas, currency strategist with Forex Capital Markets, said the greenback staged a “broad rebound” against the major currencies.

She said “fundamentals were also working against the euro” after the Eurostat data agency reported that eurozone industrial production fell 1.9 percent in April over one month, bringing the drop over 12 months to a record 21.6 percent, the sharpest annual contraction on record.

The drop was steeper than economists’ forecast of a slump of 0.6 percent from March.

Neil Mellor, an analyst at the Bank of New York Mellon, also noted that the euro fell following the grim eurozone industrial output data.

But “recent trends in the major currency pairs have been driven largely by general US dollar weakness rather than the perceived strength of its counterparts’ underlying fundamentals,” he cautioned.

Belkas said traders would keep an eye out for the communique at the end of the weekend meeting of finance ministers and central bankers of the Group of Eight top world powers in Lecce in southern Italy.

She said that “indications that exit strategies for the stimulus measures enacted by members are being plotted could provide a boost to risk appetite.”

The US dollar, viewed as a safe-haven currency in times of economic uncertainty, usually falls if investors moved towards riskier currencies such as the euro.

“Well, it looks like we end the week with dollar bears on their back foot,” analysts at PNC bank said in a note to clients.

Among others factors that boosted the dollar was a comment by Japanese Finance Minister Kaoru Yosano that Tokyo’s confidence in US debt was “unshakable” and that the dollar was a safe global currency, they said.

“This was especially timely in Asia where surpluses abound and countries are heavily invested in US Treasuries. China and Japan are the two US largest creditors in that order, the analysts wrote.

The dollar also rose Friday to 1.0789 Swiss francs from 1.0701 a day earlier.

The pound fell to 1.6442 dollars from 1.6588.