ISM figures help push dollar rally
July 1, 2005
The US dollar was strong on Friday after the release of data from the Institute of Supply Management that showed its manufacturing index up to 53.8 in June when it had not been expected to rise above May’s figure of 51.4.
Another factor in the dollar’s strength were comments from the Federal open market committee that make it sound like the Fed will continue to raise interest rates at the current pace for the foreseeable future.
Some analysts took this to indicate that US interest rates might reach 4.25 by the end of 2005. The dollar gained 1.1 percent to $1.1958 in relation to the euro, a 13-month high. It was up 0.8 percent for the day and 2.2 percent for the week to ¥111.64 against the yen, and up 1.1 percent on the day and 2.9 percent on the week in relation to sterling, to $1.7705.
The US dollar gained 1.4 percent to C$1.2416 against the Canadian dollar. The Australian dollar lost 2.4 percent for the week to the US dollar, to $0.7516, while the New Zealand dollar lost 3.1 percent to $0.6834 in relation to the greenback.
Dollar rises against foreign currencies
June 9, 2005
The dollar was up on Thursday in relation to the euro, the yen, sterling, and the Canadian dollar on Thursday.
The dollar was up 0.4 percent against the euro to $1.2177. It was rose by 0.5 percent against the yen to ¥107.76, gained 0.3 percent to $1.8176 against sterling, and advanced by 0.5 percent to C$1.2579 in relation to the Canadian dollar.
Predictions from JP Morgan that interest rates would stand at 4.25 percent by the end of the year and that the dollar would strengthen to $1.18 in relation to the euro and to ¥110 against the yen by March 2006 helped the dollar higher.
So did comments by Federal Reserve chairman Alan Greenspan to a Congressional committee on Thursday. He gave a fairly optimistic assessment of the US economy, including his belief that the US economy is on “a reasonably firm footing” and that inflation is at an acceptable level.
Dollar down on forex markets
June 6, 2005
The US dollar was down in relation to almost all currencies on Monday.
The exception was the Brazilian real, which fell 1.9 percent in relation to the dollar amid sell-offs in reaction to a political corruption scandal in which the Brazilian Workers Party has been accused to paying congressmen to support its programs.
The US dollar was also down 0.4 percent against sterling, to $1.8205. It was also down 1.3 percent to $0.7651 in relation to the Australian dollar and fell 1.4 percent against the New Zealand dollar.
The yen was up in relation to the US dollar, rising 0.8 percent to ¥106.87.
Dollar rally strengthens against euro
May 20, 2005
A continuing string of recent negative economic news in recent weeks, it was expected by some that the US dollar would end its recent rally.
After a stall in the middle of the week, however, the dollar on Friday reached its highest level against the euro since the beginning of the year. It also hit a one-month high in relation to the yen.
Some of the news that was expected to send the dollar on a downward trend against other currencies included figures showing that core consumer prices were unchanged in April, even though a 0.2 percent rise had been expected.
Additionally, industrial production figures were down 0.2 percent in April. Some rationalized that most of that decline came from the automotive sector, which served to neutralize its effect.
Then, most recently, data released on Monday by the US Treasury department showed that net portfolio inflows into the US fell to $45.7 billion in March, down from $81.4 billion in February and the lowest since October 2003.
By the middle of the afternoon on Friday in New York, the dollar had risen 0.5 percent for the week in relation to the euro, to $1.2550, and it gained 0.8 percent against the yen to stand at ¥108.10. The dollar also rose in relation to sterling, where it gained 1.3 percent to $1.8260.
USD peaks on 7-month high
May 16, 2005
The US dollar managed to hit a seven-month high in relation to the euro in early trading, when
it rose to $1.2582.
By mid-afternoon, though, it had fallen back to $1.2625, 0.1 percent off of Friday’s close.
The dollar had been rising due to last week’s good US economic news.
However, a report issued Monday morning said that net capital inflows into the US had fallen to the lowest level since October 2003.
This created worries concerning how the U.S. will fund its deficits. The dollar rose in relation to the yen, though, to ¥107.10 at mid-afternoon. It had been even higher, to ¥107.79, earlier in the day.
Dollar on 6-month high against euro
May 13, 2005
The US dollar set a fresh six-month high against the euro in Friday after doing
so on Thursday as well. The dollar was up another 0.4 cents to $1.2634 in relation to the euro on Friday.
This was its strongest position since October 21 of last year. It gained 3.2 cents on the euro for the week. The dollar also rose in relation to sterling, the Swiss franc, and the yen. It set a three-month high in relation to sterling as it rose 0.8 cents to $1.8552.
The dollar also reached a three month high by gaining 0.8 centimes against the Swiss franc to sit at SFr1.2232. The dollar rose ¥0.3 to ¥107.11 against the yen.
Figures confuse US inflation outlook
April 28, 2005
The U.S. dollar was slightly up Thursday against both the euro and the yen. The dollar was up to $1.2913 in relation to the euro and stood at ¥105.97 against the yen.
Meanwhile, analysts were debating weather just-released gross domestic product (GDP) data was a harbinger of a rising or falling value for the dollar.
The GDP showed 3.1 percent growth in the first quarter, lower than expected However the core personal consumption expenditures (PCE) deflator, which serves as the Federal Reserve’s preferred measure of inflation, had risen to 2.2 percent, up 1.7 percent from the previous quarter.
According to analysts, the first number could indicate to the Fed that it should let up its tightening of the economy, but the second figure is said to imply that the Fed should continue on its current course of tightening measures.
This means that the Fed could face the difficult choice of either controlling inflation or letting unacceptable unemployment levels persist. One expert warned that the economy was on the road to stagflation, but other experts argue that stagflation could actually have the effect of supporting the dollar.
Dollar trading steady again
April 21, 2005
The U.S. dollar was trading almost the same as its overnight close on Thursday. It was up 0.1 percent against the yen at 107.16, but it stayed the same in relation to the euro at $1.3096.
The dollar had been down on Wednesday after news of strong U.S. inflation figures.
The sterling was down in relation to the dollar, falling 0.4 percent from its overnight close to $1.9120. It also fell 0.4 percent against the euro, to 0.6845 on news that UK retail sales had fallen 0.1 percent instead of rising 0.4 percent, as had been expected.
Also having an effect on the sterling was the release on Wednesday of the Bank of England’s Monetary Policy Committee Meeting minutes from April, which showed the committee strongly in favor of keeping interest rates where they are.
The seven to two vote indicated that interest rates would probably remain the same in May as well. Meanwhile, the Swiss frank rose to $1.1740 in relation to the U.S. dollar on Thursday before settling to trade at $1.1775.
Federal Open Market Committee minutes create market uncertainties
April 13, 2005
The dollar had lost ground against the yen and the euro by midmorning on Wednesday in London trading after the release of the March minutes of the Federal Open Market Committee (FOMC) meeting.
Those minutes left open questions about the direction and speed of interest rate change.
More meaning was assigned to comments in the minutes that said it was not currently necessary to speed up “policy tightening” than to the fact that the FOMC had removed the phrase “measured pace” from its policy statements.
Not all analysts were convinced that this was a correct interpretation. However it was thought that the dollar could recover if March US retail sales figures, which were to be released later on Wednesday, were over the predicted 0.5 percent.
The dollar had lost most in relation to the yen and was ¥0.38 lower than it’s close in New York on Tuesday. The euro had gained about 0.1 cent and was trading at $1.2930 at midmorning in London.
Deficit not good, but dollar holds steady
April 12, 2005
The news was not good, but not nearly as bad as expected either on Tuesday when February’s U.S. trade deficit numbers was released.
The trade deficit was $61 billion in February, an all-time high. This was up from $58.3 billion in January, which had also been a record. The increase was laid mostly to increases in crude oil prices.
Some analysts, in explaining the trade data’s small effect on the dollar, said that in order for such news to weaken the dollar substantially over a long period, such news must be a great deal worse than expected.
And, in fact, after an initial fall when the data was released, the dollar sat about the same against the euro at $1.296 in early trading.
Still unknown is what the effect on the dollar will be when the most recent Federal Open Market Committee minutes are released and investors find out what the minutes have to say concerning interest rates.
Dollar lower against flat currencies
April 11, 2005
The U.S. dollar fell in relation to the euro, sterling, the Swiss franc, the yen, and the Canadian dollar on Monday, and analysts say this likely signals an end to a month-long rally in the value of the dollar.
Analysts, citing data showing that by April 5 short positions in the dollar had fallen to their February 8 levels, the point where an early-year rally in the dollar had ended, said that the implication seemed to be that the recent rally was spurred by the liquidation of short-dollar positions.
Trade data due out on Tuesday was not expected to charge the dollar’s position in any significant way. Major currencies, although up in relation to the dollar, remained little-changed otherwise. Sterling was flat in relation to the euro and slightly lower against the yen. The yen, in turn, was somewhat higher in relation to the euro.
Bank of Korea hints then denies of dollar sell-off
February 23, 2005
News that the Bank of Korea might start to sell off its dollar reserves led to US dollar experiencing its biggest fall in 4 months, while traders worried at fears of a general sell-off of dollar reserves across Asia.
The world’s largest holders of US dollar reserves are Japan, China, Taiwan, and South Korea respectively, and with moves by OPEC nations to diversify especially into euros, a report for the South Korean parliament suggesting a move into Canadian and Australian dollars was interpreted as a move away from US dollar holdings.
South Korea was later keen to assure markets that it was not planning on selling its dollar reserves, leading to relieved speculators rallying to the dollar again.
Talk fails dollar strength
February 17, 2005
The US dollar slipped again after briefly rallying after Alan Greenspan’s semi-annual testimony to the Senate banking committee.
While there remained hints of action, there was little to satisfy the markets that any firm controls would be put in place to help the dollar gain strength in the currency markets.