Tuesday May 12, 2009 - 10:43:50 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dlr at 4-mth low as risk rally boosts oil, shares
* Dollar index at 4-month low as oil, shares rebound
* Economic data supports commodity FX, high-yielders
* Persistent optimism on global economy fuels risk rally
(Adds quotes, updates prices)
By Jamie McGeever
LONDON, May 12 (Reuters) - The dollar slid to a four-month
low on Tuesday as economic data strengthened the view that the
global recession is bottoming, boosting stocks and oil to the
benefit of currencies like sterling and the Australian dollar.
A batch of UK reports including retail sales, housing market
and industrial production data as well as economic indicators
from Australia and China stoked the view that the "green shoots"
of economic recovery may indeed be deep-rooted.
European Central Bank President Jean-Claude Trichet on
Monday echoed that view, saying the global economy is at an
"inflection point" and could turn the corner soon.
Oil prices jumped to a six-month high just shy of $60 a
barrel and European shares shrugged off declines in Asia and
overnight on Wall Street to rise 0.5 percent on the day.
"People detect this turn in manufacturing ... and now
Trichet seems to be on board, which is a good thing," said
Michael Hart, currency strategist at Citigroup in London.
Hart advised caution, however, noting the numbers are merely
"less catastrophic" and that the currency market's technical
picture is triggering much of the dollar selling from model
The driver behind the latest fall in the dollar against most
other currencies bar the yen was a report that showed British
manufacturing output fell 0.1 percent on the month in March,
beating analysts' forecast for 0.8 percent fall. [ID:nONS004227]
Neville Hill, director, European Economics at Credit Suisse,
was more bullish on the economic outlook.
"If the production numbers continue their steady improvement
in the next few months (as the PMI surveys suggest), then a
slight increase in UK GDP in Q2 is possible. If that's the case,
then the recession may already be over," he said.
At 1015 GMT the dollar index was down 0.6 percent on the day
at 82.31 .DXY, having earlier hit 82.271, the lowest since
The dollar index is well on track for its third consecutive
close below the 200-day moving average and is below the
longer-term technical support -- now resistance -- of the
200-day moving average at 82.755.
The euro rose 0.7 percent to $1.3670 <EUR=>, peaking earlier
at $1.3677 and is firmly on track for a third daily close above
the 200-day moving average and second straight week above the
200-week moving average.
Sterling was up 1.2 percent on the day at $1.5290 <GBP=>,
having briefly traded above $1.53 for the first time since
The Australian dollar was up 1 percent at $0.7655 <AUD=> and
the U.S. dollar was flat against the yen at 97.55 yen <JPY=>.
Earlier, data from China showed a month-on-month rise in
exports, even though the annual figure fell sharply. This was
also offset by other data indicating the pace of Chinese
fixed-asset investment growth in urban areas has gathered
This suggested Beijing is succeeding in cushioning the
effect on the economy of contracting exports. [ID:nBJB000608]
Australia's government on Tuesday unveiled its largest
deficit on record, cut its growth predictions and raised its
jobless forecasts. But even this failed to put a significant
dent into the global risk rally.
Nor did the International Monetary Fund's call on Tuesday
for Europe to take bolder steps to fix its banks and better
coordinate national policies to improve the chances of emerging
from recession next year.
"In the bigger picture not much has changed. The green
shoots still have roots," said Maurice Pomery, managing director
of Strategic Alpha in London.
For more on the Australian data and UK figures that showed
the sharpest rise in retail sales for three years in April, see
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