NEW YORK: The US dollar surged against its major counterparts as the divergence between approaching tighter monetary policy in the US and looser policies in Europe, Japan, and Switzerland continues to widen, a National Bank of Kuwait (NBK) report has said.
In its latest meeting, the Fed acknowledged the improvement in the US labor market and noted that the economy is making progress toward its goals in inflation and employment, the report added on Sunday.That combined with an upbeat jobless claims report pushed the US dollar to close the week higher. Additionally, the US dollar was lifted by the recent volatility stemming from the Russian financial crisis, which drove investors to seek safety in the greenback, noted.
The Federal Reserve said it will be patient on the timing of the first interest-rate increase since 2006, replacing a pledge to keep borrowing costs near zero for a “considerable time,” and raised its assessment of the labor market, the report said.
Meanwhile, new-home construction in the US exceeded a 1 million annualized pace in November for a third consecutive month, continuing a slow recovery in the housing market. While housing starts declined 1.6 percent to a 1.03 million annualized rate, they retreated from a 1.05 million pace in October.That was stronger than previously estimated, as per figures from the Commerce Department. Economists expected a 1.04 million rate. The last time starts exceeded 1 million for three months straight was in early 2008.
On the US consumer prices, the NBK report said they had recorded their biggest drop in nearly six years in November as gasoline prices tumbled, but did little to change views the Federal Reserve would start raising interest rates in mid-2015.
The Labor Department said on Wednesday its Consumer Price Index fell 0.3 percent, the largest decline since December 2008, after being flat in October.
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting the labor market continued to strengthen. Initial claims for state unemployment benefits declined by 6,000 to a seasonally adjusted 289,000 for the week ended December 13, the report stated.
As for Europe, the NBK said that the German business confidence rose for a second month in a sign that Europe’s largest economy is overcoming the soft patch it hit earlier in the year.