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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Wall Street rises as bond market tensions ease

Posted: 29 May 2009 0531 hrs

A trader watches the numbers as he works on the floor of the New York Stock Exchange.

NEW YORK - Wall Street stocks rose strongly Thursday, lifted by a late rally as tensions eased on the bond market following news of robust demand for Treasury bonds.

The Dow Jones Industrial Average of 30 blue-chip stocks rallied 103.78 points (1.25 percent) to finish at 8,403.80.

The tech-heavy Nasdaq gained 20.71 points (1.20 percent) to 1,751.79 and the broad-market Standard & Poor's 500 index advanced 13.77 points (1.54 percent) to 906.83.

The major indices had churned in a narrow range as investors digested a mixed batch of US economic data and details of a bankruptcy plan for General Motors.

"The equities market reversed course at midday, fueled by climbing commodities prices and stronger-than-expected results from the latest Treasury bond auction," said Andrea Kramer at Schaeffer's Investment Research.

"By the closing bell, all the stars seemingly aligned for the Dow, which ended the session with a triple-digit gain," she added.

Bonds rebounded from Wednesday's sell-off. The yield on the 10-year US Treasury bond fell to 3.672 percent from 3.695 percent on Wednesday and that on the 30-year bond eased to 4.530 percent from 4.606 percent. Bond yields and prices move in opposite directions.

Charles Schwab & Co. analysts also noted traders' relief that a Treasury auction of seven-year bonds trimmed yields that had hit months-long highs Wednesday on worries about the swelling US government debt that also drove stocks into a rout.

"A good auction in the bond market pressured yields, which have moved to uneasily high levels, providing some relative relief to fears that increasing yields may hamper a recovery in the equity markets, and stocks finished solidly higher," they wrote in a client note.

Energy shares led gains after the US government reported a surprisingly large decline in US crude oil inventories, sparking hopes of a recovery in demand that sent oil prices sharply higher.

"Big oil has been good for the US economy. Big oil does well when the economy is doing well and the increase that we have seen in oil prices is a sign that the economy is recovering," said Phil Flynn of Alaron Trading.

Oil majors lifted after crude oil prices topped 65 dollars a barrel for the first time in more than six months.

ExxonMobil, the Dow's biggest component, gained 1.36 percent to 69.23 dollars and Chevron leapt 1.92 percent to 65.81 dollars.

Among other stocks in focus, reeling General Motors slid 2.61 percent to 1.12 dollars. The largest US automaker was finalizing a pre-packaged bankruptcy that would leave the US government with up to 72.5 percent of the new firm.

Procter & Gamble dropped 1.56 percent to 52.59 dollars after the consumer products manufacturer and Dow component issued disappointing guidance.

Caterpillar, another Dow component, slid 1.31 percent to 34.59 dollars after a downgrade by UBS analysts.

Time Warner added 2.39 percent to 23.55 dollars. The media group announced it would spin off its AOL Internet unit by year-end.

Telcom giant AT&T advanced 2.33 percent to 24.63 dollars after chief executive Randall Stephenson said the company intended to keep its fixed-line business, unlike rival Verizon, whose shares dropped 1.11 percent to 29.27 dollars. - AFP /ls

From ChannelNewsAsia.com; see the source article here.

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