WORLD FOREX: Dollar Dips Vs. Yen After Disappointing US Data – Wall Street Journal
WORLD FOREX: Dollar Dips Vs. Yen After Disappointing US Data – Wall Street Journal
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By Bradley DavisOf DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–The dollar fell against the yen Wednesday after another piece of disappointing economic data stoked worries the U.S. recovery is slowing.
A recent string of worse-than-expected U.S. data have drawn investor attention to the U.S. economy, taking the focus off the euro-zone’s sovereign-debt worries and allowing the euro to hover recently around $1.30.
“U.S. data may not be helpful for the dollar near-term,” said Brown Brothers Harriman analysts. The dollar hit an intraday low against the safe-harbor yen after the release of Wednesday’s disappointing U.S. durable goods figures.
Wednesday morning, the euro was at $1.2994 from $1.3006 late Tuesday, according to EBS via CQG. The dollar was at Y87.52 from Y87.97, while the euro was at Y113.74 from Y114.37. The U.K. pound was at $1.5586 from $1.5590. The dollar was at CHF1.0582 from CHF1.0600.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 82.085 from 82.138.
Demand for U.S. manufactured durable goods slid in June for a second consecutive month in another sign the manufacturing sector expansion is slowing.
Durable-goods orders fell by 1.0% to a seasonally adjusted $190.5 billion, the Commerce Department said Wednesday. Economists surveyed by Dow Jones Newswires expected a 1.1% gain.
“Even prior to today’s number, you’ve got this kind of growing chorus of voices pointing to” the possibility the U.S. could dip into another recession, said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn., noting he did not share that view.
Worry over the U.S. economy taking a downturn is weighing on the dollar, Wilkinson said. Investors will pour over the Federal Reserve’s Beige Book, to be released at 2 p.m. EDT, for another assessment of the U.S. recovery from the perspective of the regional Fed banks.
“The Beige Book will likely confirm the bleak outlook indicated by the regional Fed surveys and the U.S. dollar weakness should continue,” said BNP Paribas analysts, with the euro targeting $1.3130.
The euro, meanwhile, continues to enjoy its time out of the spotlight, as concern eases over the euro-zone’s sovereign-debt crisis, which was shown so far not to have hobbled the banking sector in last week’s bank stress tests, increasing investor confidence in the common currency.
Separately, the Australian and New Zealand dollars fell sharply against the greenback after worse-than-expected domestic data for both of the economies took some shine off the commodity-backed cousins.
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Inflation in Australia rose less than expected in the second quarter of 2010, supporting the case for the Reserve Bank of Australia to holster its interest rate gun possibly until 2011.
Economists said the data confirm Australia may have temporarily won a victory over inflation pressures after aggressive interest rate increases over the last year.
Having already hiked rates six times since October 2009, the RBA has been sidelined since May saying it has been waiting for the release of the inflation report and signs of improved confidence in global markets.
The Australian dollar was down 1.05% against the U.S. dollar by morning New York trading.
Meanwhile, the New Zealand dollar dropped nearly 0.8% against the greenback after a report showed the country’s business confidence eased in July from June, a leading survey showed Wednesday.
Economists widely expect the Reserve Bank of New Zealand to raise its key interest rate by 25 basis points during late Wednesday New York hours to 3.00%. But a slightly more cautious statement is expected as the economic recovery remains fairly tepid.
Canada Morning
The Canadian dollar was trading slightly higher against the U.S. dollar Wednesday morning, as investors flirted with riskier assets.
The U.S. dollar was at C$1.0321, from C$1.0364 late Tuesday.
“The market is really struggling to find direction overall. It seems that it can’t really decide between the double dip or global recovery, at the moment, or whether risk is on or risk is off,” said Shaun Osborne, chief currency strategist at TD Securities in Toronto.
Investors look now to the Fed’s Beige Book and Canada’s May real gross domestic product data, due Friday, to provide that direction, Osborne said.
-By Bradley Davis, Dow Jones Newswires; 212-416-2654;
bradley.davis@dowjones.com
(Karen Johnson in Toronto, Rebecca Howard in Wellington and James Glynn in Sydney contributed to this article.)
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