Dollar To Gain Euro

THE dollar firmed against the euro yesterday after a Philadelphia Federal Reserve business conditions survey exceeded expectations.

But analysts said the currency?s gains were muted considering the robustness of the report.

"The dollar?s reaction to the Philadelphia Fed number has been subdued, considering the number was so strong ...The report points maybe to stronger data in July," said Meg Browne, a currency strategist with HSBC in New York.

The Philadelphia Fed index for July came in at 36.1, overshooting economists? forecasts for a drop to 25.0 from June?s 28.9 reading.

The euro fell to session lows below $1.2350 soon after the report and were down more than 0.2 per cent on the day.

Against the yen, the dollar rose to ¥109.65, up from about ¥109.55 shortly before the report and up about 0.4 per cent. Early afternoon in New York, against the Swiss franc, the dollar traded at 1.2352 francs, up about 0.5 per cent.

Sterling traded at $1.8530, down about 0.2 per cent.

Earlier, the core US producer price index, stripping out volatile food and energy costs, rose 0.2 per cent, matching the consensus forecast. Overall, producer prices fell 0.3 per cent, below economists? forecasts for a rise of 0.2 per cent.

Following the PPI report, the dollar traded steadily despite weaker than expected US industrial output figures.

US June industrial output fell 0.3 per cent, below economists? forecasts for the report to come in unchanged.