Wednesday November 14, 2007 - 22:37:59 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dollar drops as U.S. growth fears dog market
(Recasts, updates prices)
By Nick Olivari
NEW YORK, Nov 14 (Reuters) - The dollar slipped on
Wednesday as worries about the struggling U.S. housing sector
and lingering credit problems weighed on sentiment, leaving the
dollar's long-term downtrend intact.
Data showing U.S. retail sales growth slowed slightly in
October, in line with expectations, and flat producer prices
sustained investors' decisions to keep pushing the dollar
toward record lows against the euro.
"Retail and sales and PPI at the margin support a weaker
dollar," said Meg Browne, senior currency strategist at Brown
Brothers Harriman in New York. "Retail sales supports the view
that growth is slowing."
The euro rose 0.3 percent to $1.4643 <EUR=>, within sight
of record highs of $1.4752 reached last week. Against the Swiss
franc, the dollar fell to the lowest level since April 1995, at
1.1178 francs <CHF=> before recovering to trade at 1.1243,
still down 0.2 percent on the day.
Another prominent theme in the market was the rebound in
investors' willingness to take bigger risks for a higher
Earlier this week, nervousness about the difficult lending
environment caused the yen to surge across the board, rising to
an 18-month high against the dollar as investors unwound carry
trades, in which a low-yielding currency such as the yen is
borrowed to fund purchases of higher-yielding ones.
But by Wednesday carry trades were being put back on.
The euro gained 0.7 percent to 163.05 yen <EURJPY=>,
pulling away from a two-month low of 158.66 yen hit on Tuesday.
The dollar was up 0.4 percent to 111.36 yen <JPY=>.
The Australian dollar, often a target of carry traders
because of its relatively high interest rate, ended the day
little changed against the greenback at $0.8964 <AUD=>, though
it was well off a 23-year high of $0.9401 reached last week.
Against the yen, the Australian dollar rose 0.4 percent to
99.79 yen <AUDJPY=R>.
"The recent rise in risk aversion reflects the broadly
anticipated aftershock in the financial sector of the liquidity
crisis earthquake of August," said Michael Woolfolk, senior
currency strategist with Bank of New York Mellon.
"Risk aversion is likely to abate as incoming data reflect
ongoing consumer spending," he said in a note.
Sterling fell against the euro after the Bank of England's
Quarterly Inflation Report signaled that the benchmark interest
rate would need to be cut in the future. The euro climbed to a
four-year high against the pound at 71.36 pence <EURGBP=> and
remained near that high at 71.33 pence.
Thus far, global growth has held up fairly well outside the
United States, but the report added to uncertainty about global
economic growth in the wake of this summer's crisis stemming
from the U.S. subprime mortgage market.
A report earlier on Wednesday showed euro zone economic
growth rebounded more than expected in the third quarter, but
economists expected a slowdown in the current quarter would
keep the European Central Bank on hold.
(Additional reporting by Kevin Plumberg; editing by Leslie
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."