Saturday, June 20, 2009
LONDON: The dollar softened against the euro on Friday as investors showed more confidence in world economic prospects and were prepared to move out of the safe-haven US currency.
The single European currency in late day trade rose to 1.4012 dollars from 1.3901 dollars late Thursday in New York.
The dollar was at 96.18 yen against 96.55.
"The euro should continue to climb against the dollar as investor confidence is restored," said analysts at BNP Paribas bank.
They pointed to recent encouraging reports from the United States suggesting that a recovery may be starting to take hold in the world's largest economy.
On Thursday, the Conference Board's index of leading economic indicators, a measure of economic conditions in the coming months, rose 1.2 percent in May from the prior month. Most analysts had expected a rise of 1.0 percent.
As chances for a rebound in the United States strengthen, investors are emboldened to take positions in currencies seen as riskier than the dollar, notably the euro.
The euro also drew strength from recent stability on world financial markets, which further encourages investors to venture into currencies apart from the dollar.
"As the level of panic in financial markets is falling, traders are changing gears on buying currencies that attest to strength in the global economy," said Sumitomo Trust and Bank foreign exchange strategist Jitsuo Tachibana.
At the same time, other analysts cautioned that concerns over the health of US public finances, notably the country's massive budget deficit, were likely to cast a shadow over the recent encouraging data.
Washington will issue a record 104 billion dollars in new bonds next week and traders "will be nervously watching for how this jump in supply is absorbed with implications for the dollar and bond yields," NAB Capital strategists wrote in a research note to clients.
The auction comes just after President Barack Obama unveiled a financial overhaul that includes expanding the power of the Federal Reserve to oversee regulation on all risky finance firms or lenders.
Investors will also be waiting for the Fed's monetary policy meeting beginning next Tuesday for clues on the outlook for interest rates.
In London trade on Friday, the euro was changing hands at 1.4012 dollars against 1.3901 dollars late on Thursday, at 134.55 yen (134.23), 0.8466 pounds (0.8508) and 1.5084 Swiss francs (1.5099).
The dollar stood at 96.18 yen (96.55) and 1.0784 Swiss francs (1.0861).
The pound was at 1.6524 dollars (1.6331).
On the London Bullion Market, the price of gold fell to 935.25 dollars an ounce at the fixing from 940.50 dollars an ounce late on Thursday.
(AFP)
LONDON: The dollar softened against the euro on Friday as investors showed more confidence in world economic prospects and were prepared to move out of the safe-haven US currency.
The single European currency in late day trade rose to 1.4012 dollars from 1.3901 dollars late Thursday in New York.
The dollar was at 96.18 yen against 96.55.
"The euro should continue to climb against the dollar as investor confidence is restored," said analysts at BNP Paribas bank.
They pointed to recent encouraging reports from the United States suggesting that a recovery may be starting to take hold in the world's largest economy.
On Thursday, the Conference Board's index of leading economic indicators, a measure of economic conditions in the coming months, rose 1.2 percent in May from the prior month. Most analysts had expected a rise of 1.0 percent.
As chances for a rebound in the United States strengthen, investors are emboldened to take positions in currencies seen as riskier than the dollar, notably the euro.
The euro also drew strength from recent stability on world financial markets, which further encourages investors to venture into currencies apart from the dollar.
"As the level of panic in financial markets is falling, traders are changing gears on buying currencies that attest to strength in the global economy," said Sumitomo Trust and Bank foreign exchange strategist Jitsuo Tachibana.
At the same time, other analysts cautioned that concerns over the health of US public finances, notably the country's massive budget deficit, were likely to cast a shadow over the recent encouraging data.
Washington will issue a record 104 billion dollars in new bonds next week and traders "will be nervously watching for how this jump in supply is absorbed with implications for the dollar and bond yields," NAB Capital strategists wrote in a research note to clients.
The auction comes just after President Barack Obama unveiled a financial overhaul that includes expanding the power of the Federal Reserve to oversee regulation on all risky finance firms or lenders.
Investors will also be waiting for the Fed's monetary policy meeting beginning next Tuesday for clues on the outlook for interest rates.
In London trade on Friday, the euro was changing hands at 1.4012 dollars against 1.3901 dollars late on Thursday, at 134.55 yen (134.23), 0.8466 pounds (0.8508) and 1.5084 Swiss francs (1.5099).
The dollar stood at 96.18 yen (96.55) and 1.0784 Swiss francs (1.0861).
The pound was at 1.6524 dollars (1.6331).
On the London Bullion Market, the price of gold fell to 935.25 dollars an ounce at the fixing from 940.50 dollars an ounce late on Thursday.
(AFP)
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