Wednesday May 7, 02:10 PM
Forex - Dollar strengthens after robust U.S. productivity data
LONDON (Thomson Financial) - The dollar rose following a robust rise in U.S. productivity data and evidence that inflationary pressures from wages have been contained.
Non-farm business productivity increased by an annual rate of 2.2 percent in the first quarter, beating Thomson IFR Markets' consensus forecast for a 1.7 percent gain.
In addition, unit labour costs rose by 2.2 percent, below the 2.6 percent economists were expecting.
'The first-quarter productivity and unit labour cost figures provide a timely reminder that the inflation outlook isn't quite as apocalyptic as many commentators seem to be suggesting,' said Paul Ashworth, U.S. economist at Capital Economics.
'If labour costs are barely rising at all the inflation outlook may not be anywhere near as bad as many people now fear,' said Ashworth (NASDAQ: ASHW - news) .
The positive U.S. data adds pressure on the euro following Wednesday morning's weak retail sales figures from the single currency zone.
Following the data, the dollar had strengthened to a day high of 1.5396 per euro, from 1.5433 prior to the release. Meanwhile, the pound had fallen to a day low of $1.9534 from 1.9554.
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