Dollar lower on investor concerns
May 1, 2006
With most foreign exchange markets closed for the May Day holiday - the major exceptions being the United States and Japan - the US dollar hit a year-long low in relation to the euro and was a low as it has been in seven months against the Japanese yen. Problems besetting the dollar include concerns over the huge budget and fiscal deficits in the US and the ongoing dispute with Iran over its nuclear program. The declines in the dollar came as investors were waiting for the release of new data on inflation, manufacturing, and personal income and spending in the United States.
The yen surged due to buying by foreign hedge funds and investment banks, adding 1 percent to ¥113.10 in relation to the US dollar. The euro gained 0.2 percent on the greenback, to $1.2626. Sterling was 0.5 percent higher versus the US dollar to $1.8269, while the Swiss franc was up by 0.4 percent against the dollar and the Canadian dollar was up 0.3 percent versus its US counterpart, to a 28-year high.
Bernanke: rate rises might pause
April 27, 2006
In testimony before the US Congress on Thursday, Federal Reserve Chairman Ben Bernanke said that it is his belief that economic growth in the US will become more moderate as the year progresses and that this will put growth at a “more sustainable” level. He also said that at some point the Fed will likely wait out a month or two without raising interest rates in an effort to “receive information more relevant to the outlook”. Despite these comments, it is still expected that the Fed will hike interest rates by another quarter point, to 5 percent, when it meets next on May 10.
US Treasury bonds saw yields drop in reaction to Mr. Bernanke’s comments. The two-year bond dropped 6.4 basis points to a yield of 4.925 percent, while the slightly less-sensitive to rates ten-year bond was down by 2 basis points to 5.090 percent. The dollar weakened in response to the remarks, hitting $1.25 versus the euro, a seven-month low. Sterling added 1 percent against the dollar, to $1.80. The equities markets were initially up after hearing Mr. Bernanke’s testimony, but then turned mixed as investors had time to absorb his comments.
Among other remarks, Mr. Bernanke said that rising energy prices were a concern, posing risks to inflation and to economic activity, but that if prices stabilize their negative effect should be minimized. He also commented on the housing market, saying that while the outlook there is uncertain, current data indicates that this sector of the economy should cool down gradually rather than experiencing a sharp downturn.
Dollar weaker despite data
April 26, 2006
Strong new economic data in the United States on Wednesday did not help the dollar in its slide against the euro. The dollar was weaker not only in relation to the shared currency, but versus the Japanese yen and sterling as well.
Among the new data reported on the day was a hike in durable goods orders of 6.1 percent in March, when only a 1.8 percent increase had been anticipated. Aircraft orders played a big role in the size of the increase, but even without that component the core reading was up 3 percent. In addition, new home sales were up in March, giving lie to the idea that the housing market was beginning to slow down. Another aspect of the dollars weakness, according to some analysts, was investor hesitation to move ahead of the day’s scheduled testimony before Congress by Federal Reserve Chairman Ben Bernanke.
At any rate, the dollar dropped 0.3 percent in relation to the euro, to $1.2462, while it dropped a fraction to ¥114.66 versus the yen and to $1.7893 against sterling.
Elsewhere, the Australian dollar was up 1.1 percent to $0.7537 versus the greenback as consumer prices down under were up 3 percent in the first quarter from a year earlier, spurring talk of more tightening of monetary policy. The Canadian dollar also gained strength versus the US dollar, adding 0.3 percent to C$1.1273 on data showing labor productivity in Canada up by 2.2 percent last year.
In Asia, the Chinese renminbi was slightly weaker versus the US dollar at Rmb8.0175 and the South Korean won was also slightly down in relation to the greenback to Won946.2 to the dollar. These declines were said by some analysts to have to do with Asian resistance to G7 calls for more flexibility in Asian currencies.
US dollar strengthens on profit-taking
April 20, 2006
The US dollar strengthened on Thursday after three days of losses, but the gains were explained by profit taking by most analysts, rather than any real shift in sentiment. The gains came even though the Conference Board’s index of leading economic indicators showed weakening due to rising energy prices.
The greenback added 0.4 percent versus the euro to $1.2321, while it was up 0.3 percent to ¥117.56 in relation to the Japanese yen and it gained 0.7 percent against sterling, to $1.7795. In addition, the US dollar was up 1.3 percent versus both the Australian and New Zealand dollars, to $0.7371 and $0.6261 respectively. The US currency also added 2 percent to $6.06 in relation to the South African rand.
Dollar mixed ahead of Fed minutes
April 18, 2006
The US dollar was slightly stronger in relation to the euro and the yen on Tuesday, but it weakened against sterling as investors awaited the release of minutes from the most recent meeting of the US Federal Reserve. Help for the dollar was found in new core producer price index data, which does not take into account food and energy costs. The index was up only 0.1 percent in March, less than had been anticipated. Other new economic data included news that housing starts were down 7.8 percent in March.
The greenback gained 0.1 percent on the euro and it was also up 0.1 percent to ¥117.7. However, the dollar dropped 0.2 percent to $1.7762 versus sterling, the lowest level since February.
World events helped the Swiss franc add 0.1 percent against the US dollar, to SFr1.2759, the highest it has been in three months.
So far this week, both the Australian and New Zealand dollars have gained on the US dollar. The Aussie has advanced by 1.7 percent to $0.7383 against the greenback, while the Kiwi has added 1.4 percent to $0.6272.
The Mexican peso has also advanced on the US dollar ahead of the upcoming presidential election in Mexico, where Mexico City’s mayor holds a 38 percent to 34 percent lead over the conservative ruling party candidate in the latest polls. The peso added 0.9 percent to 10.9825 pesos to the dollar.
US dollar weaker in light trade
April 17, 2006
Indications that US interest rates might peak at 5 percent and climbing crude oil prices combined for a weaker US dollar on Monday despite positive data on capital inflows.
The greenback dropped 1.5 percent to $1.2270 in relation to the euro and lost 0.7 percent to the Japanese yen, to ¥117.64. It was the dollar’s lowest level versus the yen in two weeks. The US currency declined 1.1 percent to $1.7709 against sterling and was down 1.8 percent to SFr1.2775 versus the Swiss franc.
New data showed that net inflows into the US in February were at $86.9 billion, much higher than the $62.6 billion that had been expected. The money coming in was more than enough to cover the months trade deficit of $65.7 billion. That was the good news.
Bad news for the dollar came in a Wall Street Journal article, which claimed that Federal Reserve officials were not inclined to raise interest rates after an expected hike in May to 5 percent. Worries over higher crude oil prices, exaggerated by the insistence of Iran that it will continue pursuing its nuclear ambitions, also hurt the greenback. Also causing concern was a new Empire State manufacturing survey from the New York Federal Reserve, which showed the index level at 15.81 in April. It was expected to be at 24.50. Additionally, the March survey was revised down to 29.03.
US dollar strengthens versus euro
April 12, 2006
The US dollar was stronger in relation to other currencies on Wednesday on new data showing that the US trade deficit had gotten smaller. After consideration of the new figures, however, investors sent the greenback slightly lower again for a mixed day overall.
The trade deficit shrunk by $2.9 billion in February to $65.7 billion, while the bilateral deficit with China dropped by $4.1 billion, from $17.9 billion to $13.8 billion. This unexpectedly large decline in the deficit with China was at least partly due to the timing of the Chinese New Year. The bilateral deficits with the European Union and Canada were also lower. The US exported goods and services worth $113 billion in February, $1.3 billion less than in January. However, imports declined even faster and were down by $4.2 billion to $178.7 billion.
At one point in the day, the dollar had risen to $1.2067 versus the euro, but when analysts concluded that the lower deficit was likely not the beginning of a trend, the dollar weakened. While it eventually settled at $1.2109 in relation to the euro, 0.2 percent higher, the greenback lost 0.1 percent against the Japanese yen, to ¥118.46.
US dollar up on week
March 24, 2006
The US dollar saw gains this week even though new data on new home sales provided a bit of uncertainty on Friday. Much of the greenback’s recovery from losses last week came on comments from new US Federal Reserve Chairman Ben Bernanke’s comments that the economy is healthy, which translated in some people’s minds to an endorsement of the dollar as well. Mr. Bernanke’s comments were also taken by most to mean that interest rates will be going up again when the Fed meets next week, despite the weak home sales data.
The US currency was up 1.3 percent during the week to $1.2028 in relation to the euro. It gained 1.5 percent versus the Japanese yen, to ¥117.57. The dollar added 0.9 percent to $1.7411 versus sterling, and advanced by 1.6 percent to SFr1.3112 in relation to the Swiss franc.
US dollar up on week
March 24, 2006
The US dollar saw gains this week even though new data on new home sales provided a bit of uncertainty on Friday. Much of the greenback’s recovery from losses last week came on comments from new US Federal Reserve Chairman Ben Bernanke’s comments that the economy is healthy, which translated in some people’s minds to an endorsement of the dollar as well. Mr. Bernanke’s comments were also taken by most to mean that interest rates will be going up again when the Fed meets next week, despite the weak home sales data.
The US currency was up 1.3 percent during the week to $1.2028 in relation to the euro. It gained 1.5 percent versus the Japanese yen, to ¥117.57. The dollar added 0.9 percent to $1.7411 versus sterling, and advanced by 1.6 percent to SFr1.3112 in relation to the Swiss franc.
US inflation up only 0.1 percent
March 16, 2006
Inflation was up only slightly in the United States in February as the Consumer Price Index was up by 0.1 percent, down from a rise of 0.7 percent in January. The new data indicates that inflation remains well under control and made some analysts speculate that it won’t be long before the Federal Reserve halts its series of interest rate hikes. While they still expect another rate hike at the end of the month, some analysts now expect that the series of hikes, now at 14 meetings in a row, will pause sooner rather than later.
The core inflation rate, excluding prices on foods and energy, was also up just 0.1 percent, less than the 0.2 percent that had been expected. In the year ending in February, core inflation was up 2.1 percent, while inflation taking in all sectors had risen 3.6 percent in the year.
Even though inflation remains low, however, separate data indicated that wages are not keeping pace with rises in the cost of living.
The new inflation data brought mixed results for the US dollar in currencies markets. At midday in New York, the euro had risen 1.2 percent in relation to the greenback, to $1.2153, while sterling was up 0.5 percent against the dollar to $1.7553. The yen, however, dropped versus the dollar, by 0.5 percent to ¥117.
Current account deficit hurts US dollar
March 14, 2006
The US dollar declined in value on Tuesday on the release of current account deficit data from the fourth quarter of last year, and on a prediction that interest rates in the US could peak at 4.75 to 5 percent.
Investors did not seem to take the current account numbers into consideration last year as the dollar gained 15 percent versus the euro and the yen, but these new numbers, which showed that the fourth quarter current account deficit totaled 7 percent of the gross domestic product triggered some selling of the dollar. One analyst called attention to the fact that this is twice the 3.5 percent of the GDP in 1985 which spurred the G7 to devalue the dollar.
The greenback lost 1.2 percent to ¥117.36 against the Japanese currency. It lost 0.9 percent versus sterling to $1.7475, dropped 0.8 percent in relation to the Swiss franc to SFr1.301, and declined 0.5 percent to $1.2020 against the euro.
Current account deficit hurts US dollar
March 14, 2006
The US dollar declined in value on Tuesday on the release of current account deficit data from the fourth quarter of last year, and on a prediction that interest rates in the US could peak at 4.75 to 5 percent.
Investors did not seem to take the current account numbers into consideration last year as the dollar gained 15 percent versus the euro and the yen, but these new numbers, which showed that the fourth quarter current account deficit totaled 7 percent of the gross domestic product triggered some selling of the dollar. One analyst called attention to the fact that this is twice the 3.5 percent of the GDP in 1985 which spurred the G7 to devalue the dollar.
The greenback lost 1.2 percent to ¥117.36 against the Japanese currency. It lost 0.9 percent versus sterling to $1.7475, dropped 0.8 percent in relation to the Swiss franc to SFr1.301, and declined 0.5 percent to $1.2020 against the euro.
Current account deficit hurts US dollar
March 14, 2006
The US dollar declined in value on Tuesday on the release of current account deficit data from the fourth quarter of last year, and on a prediction that interest rates in the US could peak at 4.75 to 5 percent.
Investors did not seem to take the current account numbers into consideration last year as the dollar gained 15 percent versus the euro and the yen, but these new numbers, which showed that the fourth quarter current account deficit totaled 7 percent of the gross domestic product triggered some selling of the dollar. One analyst called attention to the fact that this is twice the 3.5 percent of the GDP in 1985 which spurred the G7 to devalue the dollar.
The greenback lost 1.2 percent to ¥117.36 against the Japanese currency. It lost 0.9 percent versus sterling to $1.7475, dropped 0.8 percent in relation to the Swiss franc to SFr1.301, and declined 0.5 percent to $1.2020 against the euro.
US dollar strengthens
March 7, 2006
Movement in the prices of US Treasury bonds and the expectation of further US interest rate hikes sent the dollar up in European trade on Tuesday. Comments from the president of the St. Louis Federal Reserve that the Fed will have to “step a little harder on the brake” if US economic data stays strong and that it is better to tighten monetary policy more now and then have to backtrack later, had an effect on the dollar’s value. Some analysts said that the comments might mean interest rates higher than the 5 percent most analysts now expect.
The US dollar was up 1.1 cent to $1.1908 in relation to the euro, while it gained 1.4 cents to $1.7354 against sterling and rose 1.2 centimes to SFr1.3100 versus the Swiss franc. The greenback was also up 0.3 cents to C$1.1434 against the Canadian dollar and ¥0.35 higher versus the Japanese yen, to ¥117.88.
Elsewhere, both the New Zealand and Australian dollars fell in relation to the US dollar. The Australian dollar dropped 0.5 cent to $0.7353 versus the greenback, while the New Zealand dollar hit an 18-month low against the US dollar, falling 0.8 cent to $0.6486 in relation to the US currency.
Dollar down on week despite late-week gains
March 3, 2006
While the US dollar saw gains on Friday as new data from the service sector was more positive than had been expected, it still was down over the week as a whole. The greenback lost 0.5 percent on the week to sterling, to $1.7537, and it ended the week down 1.3 percent to C$1.1343 in relation to the Canadian dollar, a 14-year low. The strong Canadian dollar was being driven by strong economic growth and the expectation of another rise in interest rates to come.
Dollar down on data, politics
March 1, 2006
The US dollar also declined again as investors continued to react to Tuesday’s dollar-negative economic data. The greenback lost 0.15 cents to $1.1933 in relation to the euro and dropped 0.25 cents to $1.7558 against sterling. Analysts said that among the things holding the US currency back were the efforts to stop the move by the United Arab Emirates to buy several US ports, as well as US attempts to call China a currency manipulator.
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 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.