Dollar Pauses As Focus Shifts To Jackson Hole
The dollar was little changed versus other major currencies on Tuesday, as traders assessed rumors that Federal Reserve Chairman Ben Bernanke will hint at further support for the sluggish economy later this week.
Bernanke will speak at the Fed’s Jackson Hole symposium on Friday, and while few analysts say the chairman will explicitly signal another round of quantitative easing, he might hint at other easing measures.
Tuesday’s focus was on Europe, where a mixed bag of economic figures raised fears of a double-dip recession.
German economic sentiment declined sharply in August, the Mannheim-based ZEW Centre for European Economic Research said. The corresponding indicator fell by 22.5 points to minus 37.6 in August, well below the historical average of 25.9 and the consensus forecast of minus 26. Meanwhile, the country’s leading economic index increased to 111.9 in June from 111.0 in May.
Eurozone private sector activity growth remained at a two-year low in August, Markit Economics said. The Flash Composite Output Index stayed at 51.1 in August. Economists had expected the index to fall to neutral 50 level.
The dollar was steady near $1.4450 versus the euro, with the pair seeing little movement over the past few months. Choppy trading left the dollar at $1.65 versus the sterling.
The dollar eased slightly to Y76.50 versus, unable to rally from Friday’s record low of Y75.83.
Bank of Japan governor Masaaki Shirakawa said on Tuesday that the central bank stands ready to take appropriate action if the current rise in yen hurts the economy’s recovery, according to reports.
There was little movement near CHF 0.7880 against the Swiss franc, with the buck staying away from this month’s record low near CHF 0.7050.
In economic news from the U.S., new home sales saw an unexpected decrease in July, according to a report released by the Commerce Department on Tuesday, with the decline coming in addition to revised figures showing weaker than previously reported sales in June.
The report showed that new home sales for July came in at a seasonally adjusted annual rate of 298,000, a 0.7 percent drop from the revised June rate of 300,000.
China’s manufacturing activity improved fractionally in August, despite contracting for a second consecutive month. The flash HSBC manufacturing purchasing managers’ index rose to 49.8 in August from 49.3 in July.
