 LONDON : The out of favour dollar slipped back on Friday after sharp early gains made against the euro as investors took profits on the European single currency's recent advance, dealers said.
They said all the markets have had a strong week, becoming increasingly confident that the global economy is on the mend, even if there remain good reasons for caution.
As the tone becomes more positive, investors are branching out into riskier assets and so away from the dollar and its safe-haven qualities, they said, adding that the US unit will likely remain under pressure for some time.
US interest rates are very low and sentiment on the dollar is unlikely to change until the figures begin to show the US economy returning to growth, pointing to a move by the Federal Reserve to hike lending costs, they said.
In late Friday London trade, the European single currency was at 1.4723 dollars, off an early low of 1.4679 dollars but still down from 1.4740 dollars in New York late Thursday when it had struck 1.4767 dollars the highest level in almost a year.
The dollar was firmer at 91.28 yen from 91.03 yen while the euro was at 134.27 yen from 134.17 yen.
The dollar hit a seven-month low of 90.16 yen on Wednesday after Japan's new finance minister suggested the authorities would not intervene on the markets to weaken the rising yen.
Dealers said that with little data around, there was no fresh lead to follow and so investor took some profits.
"Economic data is ultra thin on the ground today, leaving those who were short with little else to contemplate other than whether to take profits ahead of the weekend," said Calyon analyst David Keeble.
Commerzbank analysts said a cheap to borrow dollar was additionally under pressure as investors readily used it to buy other assets, making it possible the euro could hit 1.50 dollars.
"The 1.50 (level) is highly attractive.... The dollar has become a financing currency for carry trades, which currently constitute an attractive investment strategy," they said in a note.
"This situation is unlikely to change until there are signs that the Fed might raise rates. In an environment such as this the 1.50 (dollars level) seems the next logical target."
The British pound meanwhile fell sharply after news that the country's public finances plunged further into the red in August, striking a record deficit for the month under the weight of a deep recession.
In London on Friday, the euro was changing hands at 1.4723 dollars against 1.4740 dollars late on Thursday, at 134.27 yen (134.17), 0.9036 pounds (0.8960) and 1.5142 Swiss francs (1.5159).
The dollar stood at 91.28 yen (91.03) and 1.0294 Swiss francs (1.0283).
The pound was at 1.6279 dollars (1.6445).
On the London Bullion Market, the price of gold eased to 1,012 dollars an ounce from 1,018.50 dollars an ounce late on Thursday.
|
No comments:
Post a Comment