Dollar Slides Against Yen, Edges Up Against European Majors
During early Asian deals on Tuesday, the U.S. dollar weakened against the Japanese yen, but it strengthened against the currencies of U.K., Europe and Switzerland as investors look forward to the U.S. government’s revised figures for third-quarter gross domestic product.
The U.S. Bureau of Economic Analysis is due to release its third quarter GDP report at 8:30 am ET. The report is likely to show that the U.S. economy expanded at a 2.9% rate in the quarter.
Advance estimates revealed that the U.S. economy expanded at a 3.5% rate in the third quarter compared to a 0.7% contraction in the second quarter. Economists had expected a more modest 3.2% GDP growth.
Economic growth in the U.S. is likely to exceed its long-term trend in 2010, while the dollar is expected to weaken further, results of a survey by the National Association for Business Economics showed yesterday.
Real growth in gross domestic product for the fourth quarter is seen at 3%, while real GDP in 2010 as a whole is expected to gain 3.2%, the results of a poll of 48 professional forecasters revealed.
The survey also showed that the dollar was expected to weaken further in 2010, though it is tipped to stabilize against the euro. When asked to judge the present foreign exchange value of the dollar, 44% of respondents said it was undervalued on a fundamental basis, while only 20% believed that the currency
was fundamentally overvalued.
At 9:00 am ET today, the S&P/Case-Shiller home price index is scheduled to be released. Economists expect a 9.05% year-over-year decline in the 20-city composite house price index for September.
The Conference Board is scheduled to release its consumer confidence report for November at about 10 am ET. The report is expected to show that the consumer confidence index edged down to 47.5 in November.
The dollar fell to 88.84 against the yen in early Asian deals on Tuesday. The near term support for the dollar is seen at 88.6. At yesterday’s close, the dollar-yen pair was quoted at 88.98.
In early Asian trading on Tuesday, the dollar climbed to 1.4939 against the euro and 1.0117 against the franc. If the dollar gains further, it may target 1.481 against the euro and 1.022 against the franc. The euro-dollar and the dollar-franc pairs were worth 1.4963 and 1.0102, respectively at yesterday’s close.
Against the currency of U.K., the dollar rose to 1.6563 in early Asian trading on Tuesday. On the upside, 1.646 is seen as the next target level for the dollar. The pound-dollar pair closed Monday’s deals at 1.6608.
Looking ahead, the Bank of Japan will release its monthly report at 12:00 am ET.
Traders will have a busy European session today, in which the Swiss October UBS consumption indicator and third quarter employment level, German final third quarter GDP, imports and exports, French November business confidence indicator, German IFO business climate report for November and the Euro-zone September industrial new orders are expected to influence trading.
