Tuesday March 25, 2008 - 11:31:10 GMT
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Reuters - www.reuters.com
FOREX NEWS - Dollar falls as jitters on U.S. economy persist
(Changes dateline, byline, updates prices, adds quotes)
By Simon Falush
LONDON, March 25 (Reuters) - The dollar fell broadly on
Tuesday, snapping four days of gains, with persistent nerves on
U.S. economic health dominating sentiment.
The greenback staged a recovery in the lead-up to the
Western Easter break after a steep bout of profit-taking in
commodity markets saw investors retreat to cash.
Those gains were extended on Monday as JPMorgan (JPM.N: Quote, Profile, Research)
raised its offer for stricken banking heavyweight Bear Stearns
(BSC.N: Quote, Profile, Research) fivefold, and as existing U.S. homes sales rose in
But nagging doubts on the overall outlook for the greenback
saw investors selling the currency again due to scepticism on
the chances of a sustained recovery despite aggressive Federal
Reserve efforts to boost liquidity in the financial system.
"The negative dollar environment persists, there was
positive housing data but apart from that there is no solid news
to say that there will be a sustained dollar recovery," said
Niels Christensen, currency strategist at Nordea in Copenhagen.
The supportive tap of cash from profit-taking in commodities
had also slowed as gold prices <XAU=> bounced, but oil was still
depressed near $100 a barrel CLc1.
By 0920 GMT the euro was up 0.65 percent to $1.5532 <EUR=>
after falling as low as $1.5341 in the previous session. The
single currency is down from a record high of $1.5904 hit last
week, but was still up 6.4 percent since the start of this year.
Rhetoric against the euro's recent climb continued on Monday
with comments from ECB Vice-President Lucas Papademos who said
that recent moves in exchange rates had been excessive. ((Click
The dollar was broadly flat against the yen at 100.55 yen
<JPY=>, erasing earlier gains to above 101 yen made after data
The dollar had tumbled to a record low against the euro and
a 13-year trough of 95.77 yen last week when the announcement of
Bear Stearns' takeover at a rock-bottom price stoked fears that
other major financial firms could be casualties in the crisis.
HIGHER YIELDERS RISE
High yielding currencies performed strongly, drawing support
from rising stocks.
The New Zealand dollar was up 1.3 percent to $0.8017 <NZD=>
while the Australian dollar climbed about 0.6 percent to $0.9122
Rising stocks typically prod investors to borrow funds in
low-yielding currencies like the yen to buy higher-yielding
currencies in the carry trade. Japan's Nikkei share average
.N225 jumped 2.1 percent on Tuesday.
Some market players were wary about returning to riskier
trades because several recoveries in risk appetite have proved
to be short-lived since the credit market crisis erupted.
Investors will scour U.S. data later in the day that include
the S&P/Case Shiller indexes on U.S. housing prices, along with
the Conference Board's report on consumer confidence in March.
"We would view this as a bear market bounce and see plenty of
potential for investor confidence to be dented this week by
releases such as consumer confidence, new home sales and even
today's Case Schiller house price index," said ING in a note to
(Editing by Stephen Nisbet)
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