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CURRENCIES: Dollar Retreats As Market Sentiment Improves
By William L. Watts
The U.S. dollar lost ground versus major
rivals, with safe-haven flows drying up as equity markets turned higher
and economic sentiment lost some of its recent gloom, strategists said.
The dollar managed to post a gain versus the yen, however, as the
Japanese currency also lost some of its haven-related appeal.
"Some positive numbers from China and news that the IMF has revised
higher its 2010 forecast provided some support and a reason for
profit-taking, particularly on the yen, which has dropped back from a
4-month high," wrote strategists at Brown Brothers Harriman.
New vehicle sales in China jumped 36.5% in June from a year earlier,
marking the fourth straight month that vehicle sales have topped 1.1
million units, according to the state-run Xinhua News agency Thursday.
The IMF on Wednesday raised its forecast for 2010 growth to a 2.5% rate, compared with its forecast for a 1.9% rate in April.
U.S. equities stabilized Wednesday. Asian indexes posted a mixed finish
Thursday, while European markets were holding modest gains and U.S.
stock index futures pointed to a higher opening for Wall Street.
The dollar index (DXY), a measure of the greenback against a
trade-weighted basket of six major currencies, slipped to 80.236, down
from 80.643 in North American trade late Wednesday.
The euro fetched $1.3977 versus the dollar, up from $1.3882 Wednesday, and the British pound bought $1.6206, up from $1.6061.
The Australian dollar bought 78.50 U.S. cents, up from 77.76 U.S. cents late Wednesday.
"After six consecutive days of equity losses, markets are set for
consolidation, but the anticipated consolidation should be used" to
sell into strength, wrote equity strategists at BNP Paribas, in a
research note.
They expect any euro rally to be capped in the $1.40 area as policy
makers in the euro zone become more aware of the risks of a significant
credit crunch developing in coming months.
The dollar bought 93.13 yen, up from 92.67 yen in late North American
trading on Wednesday, when it hit an intraday low of 91.81 yen -- its
lowest point in more than four months.
"The huge outperformance of the Japanese yen since the beginning of the
month is a clear and screaming sign of recent building risk aversion,"
Patrick Bennett, a Hong Kong-based currency strategist at Societe
Generale SA, wrote in emailed comments.
Leaders of the Group of Eight nations and the Group of Five emerging
economies agreed Thursday to refrain from competitive devaluations of
their currencies, Reuters reported, citing an unidentified German
source.
Leaders and representatives of the G5 nations, which include China and
India, are meeting with G8 leaders at the G8 summit in L'Aquila, Italy.
The G8 includes the United States, Japan, Germany, France, Italy, Great
Britain, Canada and Russia.
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Category: Currency trading | Added by: forex-market (2009-07-09)
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