Dollar extends losses on US economy concerns
Breitbart (Link) - AFP (July 16, 2010)
The dollar fell further on Friday, touching the lowest level so far this year against the yen, as weak US data fuelled concerns about the world�s biggest economy, analysts said.
The euro rose to 1.2975 dollars in morning trading here, up from 1.2941 dollars in New York late on Thursday.
Against the Japanese currency, the dollar fell to 87.09 yen from 87.39 yen on Thursday.
In earlier trading in Tokyo, the dollar fell briefly to 86.93 yen -- the first time it had dipped below 87 yen since July 1 and the lowest level since early December.
The dollar had already plunged into the mid-87 yen range in New York on Thursday as weak US economic data dampened hopes for a rapid exit from recession.
�The US economy, which had been believed to be staging a solid recovery, now seems to be stalling,� said Hachijuni Bank dealer Masatsugu Miyata.
�Risk aversion triggered yen buying,� he said, adding that investors believed the Japanese economy was more stable.
Dealers said the dollar might fall toward 85.00 yen.
US data such as a consumer sentiment survey and the consumer price index to be released later Friday could be a trigger for such a slide if they turn out to be worse than expected, said analysts.
Investors were worried by news that manufacturing had slumped in New York and industrial production across the US rose only modestly last month.
They were also spooked by news that inflation, measured by producer prices, has also fallen, seen by many as a sign of slow recovery and possible deflation.
As well as from US economic fears, the euro has attracted support this week -- reaching two-month dollar highs -- from a successful bond issue in Spain and plans for a bank merger in Greece.
Dealers digested official data on Friday showing the 16-nation eurozone slipped back into a trade deficit with the rest of the world in May when it posted a shortfall of 3.4 billion euros (4.4 billion dollars).
The single currency area had posted a surplus for three months in a row, thanks to a fall in the euro which boosts exports through lower prices.
In London trading, the euro was being quoted at 1.2975 dollars against 1.2941 dollars on Thursday, at 113.01 yen (113.14), 0.8413 pounds (0.8370) and 1.3511 Swiss francs (1.3469).
The dollar stood at 87.09 yen (87.39) and 1.0414 Swiss francs (1.0406).
The pound was at 1.5420 dollars (1.5455).
On the London Bullion Market, the price of gold fell to 1,205.65 dollars an ounce from 1,208 dollars an ounce on Thursday.