Dollar On Pause Ahead Of Earnings Deluge
The dollar fell no further versus other major currencies Monday morning in New York, holding near yearly lows versus the euro and loonie as the markets geared up for a slew of earnings news. Traders will be looking for clues about the health of corporations on the heels of the biggest economic downturn in decades.
Strong revenues may signal that consumers and businesses are spending again, a key indication that the worst of the recession is over.
Also, traders look forward to the results of a survey on homebuilders’ confidence for October conducted by the National Association of Homebuilders’ Association, slated for release at 1.00 p.m. ET.
Later in the week, data on producer prices, jobless claims and existing home sales will be in focus.
The dollar remained on the defensive versus the euro Monday morning, staying near a yearly low of 1.4967 set last week. The buck has tanked versus the euro of late, hurt by increased risk appetite as traders began to favor higher-yielding currencies.
Increased speculation that the interest rate gap between the US and other nations may widen has also crippled the dollar versus the loonie. The buck was at C$1.0350 Monday morning, was moving back toward a yearly low near C$1.0200 set last week.
The dollar saw choppy trading versus the sterling, and was unable to take back its losses from late last week. Stuck near 1.6300, the dollar stayed well away from a 5-month high of near 1.57 touched earlier this month.
Against the yen, the dollar stayed above the 90 mark even after the Bank of Japan’s said that there was a decreasing need to emphasize financial conditions as a downside risk, according to the minutes from the September 16 and 17 monetary policy meeting.
Elsewhere, Bank of England’s Monetary Policy Committee member Adam Posen told the Sunday Times that he favors an extension of the central bank’s GBP 175 billion asset purchase scheme. The MPC will decide whether to extend the asset purchase scheme on November 5.
