US Dollar Falls Against Most Majors
The US dollar fell against its Swiss, Japanese and European counterparts during Monday’s early session as a surge in Asian and European equities forced investors to opt for higher-yielding assets, triggering strong buying across the board.
The dollar and the yen are viewed as safe-haven currencies and both currencies rise, when investors turned risk averse and fell when risk appetite improves.
From U.S., the National Association of Homebuilders is scheduled to release the results of their survey on homebuilders’ confidence at 1 pm ET.
Bernanke is scheduled to speak at a San Francisco Fed conference on ‘Asia and the Global Financial Crisis’ in Santa Barbara, California.
The dollar that climbed to a 6-day high of 1.4831 against the euro and 1.0231 against the franc during Monday’s early Asian trading, lost ground thereafter. As of now, the greenback is trading at 1.4936 against the common currency and 1.0142 against the franc, with 1.496 and 1.012, seen as the next downside target levels respectively. On Friday’s close, the dollar-franc pair was quoted at 1.0185 and euro-dollar pair at 1.4902.
Against the yen, the dollar hit as low as 90.38 by 4:30 am ET, compared to last week’s closing value of 90.89. If the dollar slips further, is seen as the next downside target level against the yen.
Minutes from the September 16 and 17 monetary policy meeting revealed that the Bank of Japan’s board members said that there was a decreasing need to emphasize financial conditions as a downside risk.
The board added that the positive effects of the crisis measures it had undertaken were beginning to fade, while at the same time drawing attention to the effect that the rising yen was having on the Japanese economy.
A report by the Ministry of Economy, Trade and Industry said that the index measuring tertiary industrial activity in Japan was up 0.3 percent in August compared to the previous month, posting an index score of 97.1.
That beat analyst expectations for a 0.1 percent monthly increase following the revised 0.7 percent increase in July – which was originally reported higher by 0.6 percent.
The index incorporates data from firms involved with wholesale and retail trade, financial services, health care, real estate, leisure, and utilities.
On the other hand, the dollar showed strength against the pound during this time period due to across the board weakening of the latter. The dollar reached a 2-day high of 1.6244 against the pound, compared to 1.6361 hit late Friday in New York. The near term likely resistance for the dollar is seen at 1.597 level.
On the equity front, property Web site Rightmove said today that the average asking price for a house in the United Kingdom was up 0.2 percent on year in October to 230,184 pounds, marking the first annual increase since June 2008. That follows a 1.5 percent decline on year in September.
A report by the Ernst & Young ITEM Club said the British economy is set to grow 1% next year, following a fall of 4.5% in 2009. In July, the think tank had estimated 4.4% contraction in 2009 and a 0.5% growth next year.
Additionally, the British Retail Consortium said that Central London’s like-for-like retail sales rose 7.5% in September from a year earlier. This compares with a 0.2% fall in sales seen a year ago. The BRC said drier and mild weather encouraged more people to come out and shop.
