Wednesday July 30, 2008 - 22:52:30 GMT
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Reuters - www.reuters.com
FOREX NEWS-US dollar boosted by positive jobs report, Fed measures
* Dollar sees new four week high but gains limited by oil
* Overall dollar sentiment remains positive
* ADP jobs data, Fed measures help keep dollar's bid tone
(Updates prices, adds comment, change byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, July 30 (Reuters) - The U.S. dollar continued its
recovery of the past ten days on Wednesday, buoyed by an upbeat
private sector jobs report for July and ongoing efforts by
central bank officials to ease stress in financial markets.
But the dollar's gains were limited by a $4 a barrel
rebound in crude oil prices on data showing an unexpected
decline in U.S. gasoline inventories last week.
After an 18 percent slide in oil prices to three months
lows in the past ten days, the bounce in oil reignited worries
that high energy costs would undermine consumer spending and
weaken the U.S. economy further.
Overall though sentiment on the U.S. dollar remained
positive, compared with the euro, which has been of buffeted by
data showing a deteriorating European economic outlook.
"The dollar's relatively upbeat tone is due to the positive
flow of U.S. economic data and the fact that although oil is up
today, it is still about $20 below its record high," said Omer
Esiner, a market analyst at Ruesch International in
The New York Board of Trade's U.S. dollar index .DXY,
which tracks the dollar's performance against a basket of six
currencies, rose to its highest since June 24 at 73.538, before
ending the session around 73.330.
The euro slipped to $1.5567 <EUR=>, recovering from
one-month lows at $1.5521 in the wake of poor euro zone
sentiment data. Against the Japanese yen, the dollar was little
changed at 108.12 yen <JPY=>, after climbing to one-month highs
at 108.33, according to Reuters data.
"Oil is up and stocks gave up some gains, so we saw the
dollar come off a bit," says Matt Kassel, director of foreign
exchange at ING Capital Markets in New York.
"The market has been saturated with selling the euros
against the dollar in the last couple of days, so we're seeing
a bit of short-covering ahead of the non-farm payrolls report
on Friday," he added.
FOCUS ON NON-FARM PAYROLLS
The dollar's gains came after the ADP Employer Services
report showed U.S. private employers added 9,000 jobs in July
after job losses of 77,000 in June. Economists had expected a
reading of minus 60,000.
Despite the positive employment picture in the private
sector, few analysts believe this will translate to gains on
Friday's non-farm payrolls report.
"It is very unlikely that this report will be reflected in
the official payroll numbers. Indeed, taking June and July
together, the past two months have been the worst since April
2003, during the invasion of Iraq," said Ian Shepherdson, chief
U.S. economist at High Frequency Economics in Valhalla, New
"The bottom line is that the ADP is a...noisy survey, like
the official data, and single monthly observations have to be
viewed skeptically," he added.
Steps by the Federal Reserve, the European Central Bank and
their Swiss counterpart to extend liquidity offers investment
banks through January 2009 and introduce a new term auction
facility also contributed to overall positive sentiment on the
Analysts said the measures were largely aimed at addressing
month-end requirements, but noted that any move to increase
liquidity would be dollar-positive.
Still lingering worries about the U.S. financial sector
should limit the greenback's advance, traders said.
"(From) the economic data that we saw in the last few days,
yes, it looks like the rate of deterioration has slowed, but
the numbers are still generally poor and the financial sector
seems weak with systemic faults to me," said Firas Askari, head
currency trader at BMO Capital Markets in Toronto.
"I am going to wait before I jump on the U.S. dollar
(Additional reporting by Lucia Mutikani;)
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