The Dollar Rises as U.S. Economic Outlook Looks Bleak and Investors Go For Safety

The Dollar Index, which tracks the U.S. currency increased 0.6 percent to 75.328.

	EUR/USD	USD/JPY	GBP/USD	USD/CHF
Resistance	1.5270(M) 1.5096(M) 1.5065(M)	90.40(M) 89.93(M) 89.74(M)	1.7200(M) 1.7105(M) 1.7045(M)	1.0260(M) 1.0200(M) 1.0145(M)
Support	1.4940(M) 1.4880(M) 1.4825(M)	88.35(M) 88.01(M) 87.11(M)	1.6752(M) 1.6624(M) 1.6624(M)	1.0030(S) 1.0015(M) 0.9872(M)

The greenback advanced versus the euro for the first time in three days and the yen increased as U.S. industrial production rose in October less than economists forecast, discouraging demand for higher-yielding assets. “The market is waiting for economic fundamentals to confirm the risk rally hasn’t gone too far,” said Sacha Tihanyi, a currency strategist at Bank of Nova Scotia in Toronto. “A lot of currencies are still flirting with this year’s highs. There’s limited risk-reward at these valuations.” The Dollar Index, which tracks the U.S. currency’s value against the euro, yen, pound, Canadian dollar and Swiss franc, increased 0.6 percent to 75.328. The gauge touched 74.679 yesterday, the lowest level since August 2008, even after Federal Reserve Chairman Ben Bernanke said in New York that the central bank is “attentive” to changes in the dollar’s value and its policy “will help ensure that the dollar is strong.” The EUR/USD is currently trading at $1.4870 as of 20:22pm, GMT with a bullish trend.

The British Pound rose against the euro on Tuesday after a jump in UK inflation stoked speculation the Bank of England may be nearing the end of its quantitative easing program. The pound reversed initial gains against a broadly stronger dollar, which climbed on safe-haven demand, but the UK currency was supported after BoE policymaker Andrew Sentance said the UK economy was moving towards recovery. Government data on Tuesday showed British consumer price inflation rose to 1.5 percent year-on-year in October, in line with the consensus forecast, from a five-year low of 1.1 percent in September. The data is unlikely to cause undue concern to BoE policymakers, who have already penciled in a sharp rise in near-term inflation, but analysts said sterling would become increasingly sensitive to any evidence of a pick-up in prices. "The data was only slightly higher than expectations, but it was sufficient to keep sterling happy," said Adam Cole, global head of currencies at RBC in London. EUR/GBP is currently trading at $1.6815 as of 20:59pm, GMT with bearish Trend.

Canada’s currency depreciated to the lowest level in more than a week as investors lost appetite for higher-yielding assets, pushing down global stocks and lifting the U.S. dollar. The loonie trimmed losses as crude oil, the nation’s biggest export, erased a decline and rose before a report tomorrow forecast to show U.S. fuel supplies declined last week. Gold futures were little changed after falling earlier. Canada’s consumer price index likely increased 0.1 percent in October from a year earlier, after four straight monthly declines, according to the median forecast in a Bloomberg News survey of 22 economists. The USD/CAD is currently trading at 1.0514 as of 21:08pm, GMT with a bearish trend.