Market jitters send investors rushing to dollar

Posted: 01 July 2009 0607 hrs

A currency exchange worker holds a handful of euro notes in London.

NEW YORK: The US dollar gained against its main rivals on Tuesday as financial market jitters stemming from weak economic data sent investors flocking to the world's main safe-haven currency.

The euro dipped to 1.4032 dollars at 2100 GMT compared to 1.4088 dollars late on Monday.

The dollar meanwhile rose to 96.30 yen compared to 96.04 yen on Monday.

The Conference Board, a business research group, said US consumer confidence sank in June as households worried about the prolonged recession and vanishing jobs.

The index retreated to 49.3 points in June from a revised 54.8 in May, an eight-month high.

Most analysts expected a much stronger reading of 55.3 points in the 100-point index.

As a result of the disappointing data, dealers on currency markets moved away from currencies considered risky like the euro and bought up ones seen as safer like the dollar, the yen and the Swiss franc, analysts said.

Stocks fell and the dollar rose on the report, which dented hopes for a quick recovery from the recession.

The data showed Americans appear to be having a harder time finding employment, said David Rosenberg, chief economist and strategist at Gluskin Sheff.

This "portends yet another month of rising unemployment when Thursday's data roll out," he added.

Some said the dollar benefited from inflows ahead of the Independence Day holiday weekend, which begins on Friday.

"Judging from the price action, it appears that the consumer confidence report provided players with an opportunity to take profit on short dollar positions as the greenback had clearly become oversold amidst illiquid, pre-holiday trading conditions," said Michael Woolfolk at Bank of New York Mellon.

Investors were also awaiting new reports from the European Central Bank meeting on Thursday and the release of US monthly employment data the same day.

The ECB is expected to keep interest rates at a record low of 1.0 percent despite an appeal from the Organisation for Economic Cooperation and Development to lower the main rate even further to nearly zero.

In late New York trade, the dollar stood at 1.0858 Swiss francs after 1.0823 on Monday.

The pound was at 1.6459 dollars after 1.6568. - AFP/de

From ChannelNewsAsia.com; see the source article here.

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US dollar lifted by data, moves by Swiss bank

Posted: 19 June 2009 0545 hrs

NEW YORK: The US dollar recouped early losses and swung higher against the other main currencies on Thursday as the market outlook shifted on a surprisingly strong report on US leading economic indicators.

An announcement by the Swiss National Bank that it would take "firm action" to prevent franc appreciation prompted reports of intervention in the currency markets, which appeared to help the US unit, traders said.

At 2100 GMT, the euro was trading at 1.3901 dollars, from 1.3943 dollars in New York late on Wednesday. At one point, the euro broke above 1.40 dollars but then fell back.

Against the Japanese currency, the dollar rose to 96.55 yen from 95.71 yen on Wednesday.

The dollar got some early support as "weak equity markets overseas enticed traders to seek the safe-haven benefits of the dollar," said Bob Kozak at Alaron Trading.

But the greenback later appeared to benefit from better-than-expected economic news, offering support to notion of a recovery taking root in the United States.

The Conference Board said its May index of leading economic indicators, a measure of economic conditions in the coming months, rose 1.2 percent from April, beating forecasts for 1.0 percent.

The index, which had been on a downward trend since hitting a peak in July 2007, "has risen sharply in the past two months amid widespread strengths among its components," the Conference Board said.

"Two consecutive months now of strong gains in the leading indicators is the strongest evidence to date supporting the 'green shoots' rally," said Michael Woolfolk at Bank of New York Mellon.

Other reports showed a stronger-than-expected reading on a Philadelphia Federal Reserve survey on regional manufacturing and a report roughly in line with expectations on weekly jobless claims, but which offered hints that some of the unemployed were finding jobs.

Meanwhile the market mulled the Swiss National Bank announcement to keep interest rates unchanged but to work to dampen appreciation of the Swiss franc. This prompted some speculation of currency market intervention.

The Swiss authorities "said they will take 'firm action' to prevent franc appreciation as they are an export dependent country," said Mary Ann Hurley at DA Davidson & Co.

This could help the dollar since some traders are "using the Swiss franc as a proxy for the euro," said Brown Brothers Harriman analysts.

The analysts said the British pound was hurt by "much weaker than expected retail sales and the largest drop in business lending in nine years."

In late New York trade, the dollar stood 1.0861 Swiss francs after 1.0795 on Wednesday.

The pound was at 1.6331 dollars from 1.6401. - AFP/de

From ChannelNewsAsia.com; see the source article here.

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US dollar weak on growing risk appetite

Posted: 12 June 2009 0608 hrs

A euro coin and a US dollar bill.

NEW YORK: The US dollar weakened against other major currencies on Thursday as fresh data on American retail sales and jobless claims kept economic recovery hopes alive, pushing investors away from the safe-haven greenback.

The euro, viewed by the market as a riskier currency, rose to 1.4106 dollars in New York trading at around 2100 GMT from 1.3978 dollars on Wednesday.

The dollar also fell against the Japanese currency, to 97.60 yen from 98.12 yen.

Traders said appetite for risk increased amid growing signs the United States could recover late this year.

The US government said on Thursday that retail sales rose in May for the first time in three months and in line with market expectations while new claims for unemployment benefits fell last week for the fourth consecutive week.

The data came "on top of a number of recent economic releases that are reinforcing speculation that the worst of the global recession is over," said Andy Douglass of PNC Bank.

"Just as the safety of US Treasuries were sought and the US dollar was bought as the recession deepened, it is now being sold as investors are more willing to invest in 'riskier' assets," he said.

The biggest beneficiaries of the move out of US dollars on Thursday were the British, Canadian, Australian and New Zealand currencies, Douglass said.

Michael Woolfolk of the Bank of New York Mellon said dollar sentiment dampened on the back of mostly better than expected US economic data and a "successful" 30-year US Treasury auction on Thursday .

They "reduced risk aversion and bolstered carry trades away from the safe-haven greenback," he said.

Bond yields fell after the strong demand for the 30-year bonds but remain at relatively high levels that have pushed up home mortgage rates.

"Strong demand at the Treasury's auction of 30-year bonds Thursday is pushing yields lower, but a substantial further decline is needed to maintain the recent stabilization in home sales and further chances for economic recovery," said Ryan Sweet at Moody's Economy.com.

Boris Schlossberg, director of currency research at Global Forex Trading, cautioned against reading too much on the US retail sales data, saying the positive number was chalked up on the back of higher gasoline prices.

"In general, the takeaway from the retail sales number is that consumer demand appears to have stabilised but so far shows few signs of pick up," he said.

"Furthermore, the troubling rise in gasoline prices will no doubt affect disposable income going forward and could dampen demand in the months to come," he said. "Overall eco data was inconclusive."

The dollar also fell Thursday to 1.0701 Swiss francs from 1.0807 a day earlier.

The pound rose to 1.6588 dollars from 1.6360 dollars. - AFP/de

From ChannelNewsAsia.com; see the source article here.

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