Dollar Falls Further Versus Surging Sterling
The dollar failed to fight back versus the euro and extended its lowest levels since February versus the sterling Wednesday amid renewed concerns about the pace of the US economic recovery.
A disappointing reading on the manufacturing sector raised speculation that the US economy is losing momentum amid lingering weakness in the jobs and housing markets.
Demand for big ticket items meant to last more than three years, such as automobiles, was unexpectedly lower for a second straight month in June.
Durable goods orders fell by 1% to a seasonally adjusted $190.5 billion, the Commerce Department said Wednesday.
Meanwhile, the Fed’s Beige Book said economic activity was still increasing, but that activity has slowed in four districts.
Stocks pulled back a bit despite another round of relatively encouraging corporate earnings results.
With risk appetite waning, the buck fell no further versus the euro and sterling after a brutal start to the week.
The buck held near 1.3000 versus the euro after touching a 2 1/2 month low of 1.3045 yesterday. Since June the dollar has fallen sharply from a 4-year high of 1.1805.
The buck continued to move lower versus the resurgent sterling, hitting a new 5-month low of 1.5637.
There is some considerable distance to travel before interest rates return to ‘normal’, Bank of England Governor Mervyn King told lawmakers in London on Wednesday.
“There will come a point when we will certainly need to ease off the accelerator and return Bank Rate to more normal levels,” he said.
Against the yen, the dollar eased slightly to Y87.60. Versus the petro-linked loonie, the dollar improved a bit to C$1.0350.
