The dollar rose against major currencies on Friday as falling U.S. stocks added safety demand for the greenback.
A report released on Friday showed that U.S. personal income was not growing in July, and consumer spending increased slightly only because of the so-called "cash-for-clunkers" government program. Investors worried that the economy may not be going as well as expected without government support.
U.S. personal consumption expenditure increased 0.2 percent in July, the Commerce Department reported. Personal income was roughly unchanged, although wage and salary income inched up by 0.1 percent, its first increase this year. The saving rate fell to 4.2 percent in July from 4.5 percent in June.
The increase of consumer spending in July was driven by a surge of 1.8 percent in durable goods related to the "cash-for-clunkers" program, which provide vouchers to buyers who trade their old vehicles for new ones with better mileage. The White House Council of Economic Advisers estimates the program will boost economic growth by up to 0.4 percentage points in the third quarter while saving or creating 42,000 jobs in the second half of 2009.
Real spending on nondurable goods fell by 0.3 percent while services outlays rose 0.1 percent, according to the report. Real spending growth in both May and June was revised up to 0.1 percent from zero and minus 0.1 percent respectively.
When given sufficient incentive consumers will spend. But reduced wealth, high debt, tight credit, and a weakening labor market are all weighing on consumers. Consumers remain a missing link in hopes for strong recovery, said analysts of IHS Global Insight.
Some key economic reports are due next week, including reports of purchasing managers index, non-farm employment and factory orders. The Federal Reserve will release minutes of its recent monetary policy meeting. Analysts said investors were looking for trading clues, trying to speculate the trend of risk sentiment in currency trading.
The euro bought 1.4287 U.S. dollars in late New York trading compared with 1.4371 dollars it bought late Thursday. The pound fell to 1.6269 dollars from 1.6285 dollars.
The dollar rose to 1.0931 Canadian dollars from 1.0842 Canadian dollars, and rose to 1.0608 Swiss francs from 1.0575 Swiss francs. It rose to 93.60 Japanese yen from 93.45 Japanese yen.
Source: Xinhua
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