Wednesday August 5, 2009 - 21:11:36 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar dips as investors see data in best light
Wed Aug 5, 2009 4:10pm EDT
* Euro touches fresh 9-month peak vs dollar
* U.S. private job losses have limited FX impact
* Goldman raises second-half real growth forecast
* Focus turns to ECB, BoE meetings on Thursday
(Updates prices, adds comments, details)
By Steven C. Johnson
NEW YORK, Aug 5 (Reuters) - The dollar hit a nine-month low
against the euro and slipped against the yen on Wednesday as
investors hoped a slower pace of U.S. private job losses in
July hinted at a gradual improvement in the economy.
Safe-haven demand earlier lifted the dollar against the
euro after reports showed private employers cut more jobs than
expected and the dominant U.S. service sector shrank again. For
more, see [ID:nN05240699]
But July's job losses were down from June's, sparking hope
Friday's more comprehensive government employment report would
show labor market improvement.
"The jobs headline was a bit disappointing, but the market
has been judging mixed data from a glass-half-full viewpoint,"
said Michael Woolfolk, currency strategist at The Bank of New
York-Mellon. "They're trying to focus on the positives."
Goldman Sachs provided another excuse to do that by
revising its real U.S. growth forecast for the second half of
the year from 1 percent to 3 percent. [ID:nCHB002616]
Late Wednesday, the euro was little changed at $1.4414
EUR= but earlier rose to $1.4446, its highest level sine
December. The dollar fell 0.3 percent to 94.95 yen JPY=.
A clutch of better-than-expected UK data lifted sterling to
a near 10-month peak at $1.7042. It was last up 0.4 percent to
Recent data from the United States and elsewhere have been
mixed, but enough of the data has been encouraging enough to
foster hopes that the worst of the recession is over.
Investors were pleasantly surprised last month by data
showing the U.S. economy shrank by a smaller-than-expected 1
percent in the second quarter, leaving many to bet on positive
Wall Street has rallied as a result, though its dip on
Wednesday snapped a four-day winning streak. The dollar has
also found it difficult to rally as emboldened investors
instead seek higher-yielding currencies and assets.
"Markets were priced for total Armageddon and guess what?
It didn't happen," said T.J. Marta, founder of Marta on the
Markets in Scotch Plains, New Jersey. "Now many investors are
scrambling, knowing there's business out there to be done."
The trend to sell the dollar on the view that the worst of
the world recession is over has become quite deeply rooted,
"The default setting is still that risk is on unless we get
really clear, definitive data to the contrary, and that doesn't
seem likely at this stage," said Brian Dolan, chief currency
strategist at Forex.com in Bedminster, New Jersey.
Next up for currency investors are Thursday's policy
decisions from the Bank of England and European Central Bank.
A Reuters poll last week showed economists are split over
whether the BoE will inject more money into the economy by
extending its asset purchases, although recent brighter UK
economic data are seen reducing such chances.
But the risk exists, said Daragh Maher, deputy head of FX
strategy at Calyon in London. "It would be a brave investor
that held on to an aggressively long sterling position into the
(Additional reporting by Vivianne Rodrigues; Editing by
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