US dollar down on negative economic data
February 28, 2006
The US dollar was down on Tuesday after the release of several dollar-negative economic reports.
Among the bad news was a report showing that the sales of existing homes in the United States were down by 2.8 percent in January, the lowest figure in nearly two years. Also, the Chicago purchasing managers’ index was down from 58.5 in January to 54.9 in February as new orders were down significantly. Third, the Conference Board’s index of consumer confidence in the US was at 101.7 in February, lower than the 104 that had been predicted.
Reaction to these reports combined to send the US dollar down 0.6 percent to $1.1922 in relation to the euro. The greenback lost 0.8 percent against sterling, to $1.7540. It also fell 0.3 percent to C$1.1377 versus the Canadian dollar, a new 14-year low. Additionally, the US dollar fell 0.3 percent to ¥115.86 in relation to the Japanese yen.
Dollar up ahead of Fed minutes
February 21, 2006
The US dollar was up on Tuesday in early-day trade in Europe as traders awaited the release of the minutes from the most recent meeting of the US Federal Reserve. The minutes from the January 31 meeting, Alan Greenspan’s last as Fed chairman, are expected to support at least two or three more interest rate hikes. Some analysts, however, warned that the advances in anticipation of the minutes could lead to declines once the minutes actually are released.
At any rate, the greenback was up to $1.1906 in relation to the euro and to ¥118.86 against the Japanese yen. The dollar was nearly unchanged in relation to sterling, trading at $1.7443.
Dollar up ahead of Fed minutes
February 21, 2006
The US dollar was up on Tuesday in early-day trade in Europe as traders awaited the release of the minutes from the most recent meeting of the US Federal Reserve. The minutes from the January 31 meeting, Alan Greenspan’s last as Fed chairman, are expected to support at least two or three more interest rate hikes. Some analysts, however, warned that the advances in anticipation of the minutes could lead to declines once the minutes actually are released.
At any rate, the greenback was up to $1.1906 in relation to the euro and to ¥118.86 against the Japanese yen. The dollar was nearly unchanged in relation to sterling, trading at $1.7443.
US bond yields rise on strong data
February 16, 2006
US Treasury bonds traded very close to previous levels on Thursday as investors had several items of economic data to take into consideration while making buy and sell decisions.
New housing starts in the US were reported up in January and a report from the Federal Reserve Bank in Philadelphia showed a very strong increase in its February activity index. Meanwhile, new Fed chairman Ben Bernanke continued his testimony before Congress. Yesterday’s comments by Mr. Bernanke included his opinion that the inversion of the Treasury yield curve did not imply anything negative for the overall economic outlook in the US.
Immediately after the release of the Philadelphia Fed data, two-year bond yields had advanced by 0.3 basis points to 4.672 percent and ten-year yields were up 0.2 basis points to 4.602 percent.
Bernanke says US rates may rise more
February 15, 2006
The new chairman of the US Federal Reserve, Ben Bernanke, in his first testimony in front of Congress after taking office, said on Wednesday that the US economy “performed impressively” last year. He also refused to close the door to further interest rate hikes, saying that higher energy prices could mean higher consumer prices, possibly fueling inflation. Mr. Bernanke promised, however, that the Fed would be “flexible” in regards to monetary policy decisions that that “all” relevant evidence would be taken into consideration before making those decisions.
Mr. Bernanke also acknowledged that a slowdown in the housing market could be a risk to the economy, but that such a slowdown would not necessarily signal a slowdown of the entire economy. And, in fact, his testimony came just a day after retail sales data showed that the US economy expanded in January after having performed below expectations in the fourth quarter of last year.
While the new chairman has indicated an intention to continue with monetary policies put in place by his predecessor, Alan Greenspan, he is also known to favor specific targets for inflation, unlike Mr. Greenspan. These targets, Mr. Bernanke believes, will increase transparency in the activities of the Fed as well as reduce the market speculation that surrounds uncertainty about future monetary policy decisions.
US 30-year bond sale huge success
February 10, 2006
The US Treasury’s sale of 30-year long bonds in the US on Thursday, the first in over four years, was met with great success.
The U.S. Treasury received bids for 2.05 times the $14 billion in new 30-year bonds being offered for sale. Indirect bidders, which are an indication of demand from foreign investors and “real” money fund managers, amounted to a very strong 65.4 percent of the bids.
US dollar advances
February 6, 2006
The US dollar was up on Monday amid expectations that US interest rates will rise further in the foreseeable future. The greenback gained 0.5 percent in relation to the euro, to $1.1971. It was up 0.9 percent to $1.7467 against sterling, a one-month high. However, the dollar held steady in relation to the yen at ¥118.90.
Analysts at Goldman Sachs repeated the view that US interest rates will hit 5 percent and raised its estimate of first quarter growth of the gross domestic product to 4.5 percent, from a previous estimate of 3.5 percent GDP growth. Other estimates of interest rate hikes see the rates going even higher. Brown Brothers Harriman said that it believes interest rates will reach a level somewhere between 5 and 5.5 percent. These conditions are expected to support the dollar.
However, Citigroup feels that the dollar has gone about as high as it will go, citing rising Treasury yields, a slowing housing market in the US, and the impending announcement of a new record high US trade deficit as being dollar-negative.
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