Dollar falls broadly, euro hovers near $1.34 The U.S. dollar continued a recent spell of weakness Thursday as it fell across the board while the euro gained momentum, setting up for a run on $1.34. Weekly U.S. jobless claims for the week ended Aug. 3 rose 5,000 to 333,000, a smaller increase than economists had expected. Claims are part of the labor-market data that the Federal Reserve monitors in deciding when it could begin to step back on monetary stimulus. No Fed speakers are expected Thursday. The euro EURUSD +0.49% rose to $1.3392 from $1.3308 late Wednesday. The shared currency last closed above $1.34 on June 18, according to FactSet. Recent data have been painting a rosier picture of the euro-zone economy, including a return to growth in the manufacturing sector in July and more better-than-expected German manufacturing orders. European stocks responded in kind, hitting a two-month high earlier this week. The euro “could still be drifting higher supported mainly by a more stable risk environment and elements of a European cyclical recovery,” said Sebastien Galy, a senior currency strategist at Société Générale, in a note. $1.34 is the “zone of attraction,” he added. Still, the broad dollar weakness has played a major role in the euro’s rise, said Tatjana Michel, director of currency analysis at the Schwab Center for Financial Research. The mixed economic data in the U.S. of late has fanned speculation about whether the Fed will begin to slow its asset purchases in September, as many had previously expected. “As long as this isn’t really clear, I think the dollar still has some room to weaken,” she said. The ICE dollar index DXY -0.46% , which tracks the U.S. currency’s movement against six rivals, fell to 80.923 from 81.244 late Wednesday. The WSJ Dollar Index XX:BUXX -0.52% , which uses a slightly wider comparison basket, fell to 73.20 from 73.56. The dollar on Wednesday fell broadly against major rivals, though another Fed official — Cleveland Fed Bank President Sandra Pianalto — indicated the central bank could start reducing asset purchases if there’s improvement in the labor market. “The U.S. dollar was looking for a life raft on Wednesday as it continued the post-[nonfarm payrolls] slide,” currency strategist Adam Button wrote in a note for InterMarket Strategy, referring to the creation of a less than expected 162,000 jobs in the U.S. in July. The mixed jobs report released late last week highlighted uncertainty about when the Federal Reserve will slow the pace of asset purchases, which have been seen as pressuring the dollar’s value. The central bank buys $85 billion a month in U.S. debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Chinese trade surprise Earlier Thursday, Chinese trade figures that outstripped market expectations made waves in currency markets. China said its exports rose 5.1% in July, swinging from June’s 3.1% fall. Analysts polled Dow Jones Newswires had expected a 2.8% increase in exports. Imports, meanwhile, bounced up 10.9% last month, after June’s drop of 0.7%. Analysts were looking for a 1.3% rise for imports. The Aussie dollar AUDUSD +1.38% fetched 91.09 in recent trade compared with 90.00 U.S. cents late Wednesday. The Aussie gained after the data from China, Australia’s largest export market. But Australia’s jobs report for July underscored concerns about a slowdown in the domestic economy. Additionally, the Bank of Japan held monetary policy unchanged and reiterated its view that the economy “is starting to recovery moderately.” The dollar USDJPY -0.26% fell below the 96-yen level on Thursday to trade at ¥95.93 from ¥96.36 late Wednesday. The move below ¥96 was “amazing,” said Schwab’s Michel. One of the factors that had underpinned the yen over the past week had been speculation about Japanese tax hikes, said Button, noting the government appeared committed to planned increases in the national sales tax despite the fragile economy. “Now there is talk that the government could switch to 1% incremental increases in the sales tax. This may be a way to ultimately slow the pace of tax hikes while maintaining confidence in the bond market, something that could boost” the dollar’s value against the yen, he said. Meanwhile, the British pound GBPUSD +0.47% rose to $1.5551 from $1.5490 in Wednesday’s session, during which sterling climbed above $1.55 for the first time in seven weeks.
Posted on: Thu, 08 Aug 2013 16:19:45 +0000
Trending Topics
Recently Viewed Topics
© 2015