Friday, June 19, 2009
LONDON: The dollar fell against the euro Thursday after better-than-expected US data bolstered investor confidence in the outlook, prompting a switch into higher risk assets, dealers said.
During the worst global slump since the 1930s, investors have been buying into the dollar on the basis that even if the US economy is at the epicentre of the crisis, it remains the most powerful and largest in the world, they said.
This traditional safehaven status of the dollar, however, can be less attractive if data suggests the economy is picking up, offering wider investment opportunities in currencies considered riskier than the greenback.
The dollar had been firmer in recent days after weak US statistics sparked doubts about recent signs of an improvement in the economy. But the trend changed direction Thursday on the latest figures.
In late London trade, the European single currency was at 1.3963 dollars, off early lows and up from 1.3943 dollars in New York late on Wednesday. At one point, the euro broke resistance at 1.40 dollars but then fell back.
Against the Japanese currency, the dollar rose to 96.23 yen from 95.71 yen on Wednesday.
Earlier, 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.
"With these large and extensive increases, the six-month change in the index has become positive for the first time" since April 2007.
At the same time, US new jobless claims rose marginally last week -- to 608,000 from a revised 605,000 -- while the four-week moving average continued to drop and continuing claims fell sharply.
"This week's claims data provided among the clearest signals yet that labor market contraction is easing," said Andrew Gledhill at Moody's Economy.com.
Dealers said the dollar was also pressured after US inflation data on Wednesday suggested that the US Federal Reserve will be very unlikely to raise interest rates for some time.
In London trade on Thursday, the euro was changing hands at 1.3963 dollars against 1.3943 dollars late on Wednesday, at 134.32 yen (133.44), 0.8545 pounds (0.8499) and 1.5096 Swiss francs (1.5055).
The dollar stood at 96.23 yen (95.71) and 1.0816 Swiss francs (1.0795).
The pound was at 1.6336 dollars (1.6401).
On the London Bullion Market, the price of gold rose to 940.50 dollars an ounce from 930.50 dollars an ounce late on Wednesday.
(AFP)
LONDON: The dollar fell against the euro Thursday after better-than-expected US data bolstered investor confidence in the outlook, prompting a switch into higher risk assets, dealers said.
During the worst global slump since the 1930s, investors have been buying into the dollar on the basis that even if the US economy is at the epicentre of the crisis, it remains the most powerful and largest in the world, they said.
This traditional safehaven status of the dollar, however, can be less attractive if data suggests the economy is picking up, offering wider investment opportunities in currencies considered riskier than the greenback.
The dollar had been firmer in recent days after weak US statistics sparked doubts about recent signs of an improvement in the economy. But the trend changed direction Thursday on the latest figures.
In late London trade, the European single currency was at 1.3963 dollars, off early lows and up from 1.3943 dollars in New York late on Wednesday. At one point, the euro broke resistance at 1.40 dollars but then fell back.
Against the Japanese currency, the dollar rose to 96.23 yen from 95.71 yen on Wednesday.
Earlier, 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.
"With these large and extensive increases, the six-month change in the index has become positive for the first time" since April 2007.
At the same time, US new jobless claims rose marginally last week -- to 608,000 from a revised 605,000 -- while the four-week moving average continued to drop and continuing claims fell sharply.
"This week's claims data provided among the clearest signals yet that labor market contraction is easing," said Andrew Gledhill at Moody's Economy.com.
Dealers said the dollar was also pressured after US inflation data on Wednesday suggested that the US Federal Reserve will be very unlikely to raise interest rates for some time.
In London trade on Thursday, the euro was changing hands at 1.3963 dollars against 1.3943 dollars late on Wednesday, at 134.32 yen (133.44), 0.8545 pounds (0.8499) and 1.5096 Swiss francs (1.5055).
The dollar stood at 96.23 yen (95.71) and 1.0816 Swiss francs (1.0795).
The pound was at 1.6336 dollars (1.6401).
On the London Bullion Market, the price of gold rose to 940.50 dollars an ounce from 930.50 dollars an ounce late on Wednesday.
(AFP)
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