Dollar Holds Gains

In the U.S., the index of leading indicators probably rose 0.2 percent in January, a second month of gains, according to the median estimate of economists surveyed by Bloomberg News. A Fed report on manufacturing in the Philadelphia area is projected to show a rebound.

‘Gaining Momentum’

“Dollar strength is gradually gaining momentum,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency-margin company. “There are clearer signs of a U.S. economic recovery.”

Some officials on the Federal Open Market Committee “emphasized that the committee should be prepared to vary the pace of asset purchases,” according to the minutes of the FOMC’s Jan. 29-30 meeting released yesterday in Washington.

The U.S. central bank buys about $85 billion of government and mortgage securities a month to support growth, in the third round of quantitative easing that tends to debase the dollar.

In Europe, manufacturing and services industries probably shrank in February, albeit by less than the previous month, according to a Bloomberg survey of economists. The manufacturing purchasing managers index is projected to be 48.5 compared with 47.9 in January, and services PMI may come in at 49.0 from 48.6 a month earlier. A reading below 50 indicates contraction.

“The debt crisis in the euro region has eased, but its economic recovery is lagging globally,” said FX Prime’s Ueda. “When the U.S. economy picks up and the dollar’s strength starts to stand out, the euro’s weakness will be highlighted.”

(source: Bloomberg)