Dollar mixed ahead of US data
LONDON — The dollar was mixed on Tuesday as dealers waited to see whether US economic data would support recent optimism over a possible recovery and eyed fresh falls on the Chinese stock market.
Approaching midday trade in London, the euro fell to 1.4284 dollars from 1.4300 dollars in New York late on Monday.
Against the Japanese unit, the dollar slid to 94.29 yen from 94.56 yen late Monday.
The market now wants to see US economic data, especially the consumer confidence index for August, to be released later Tuesday, said Resona Bank currency analyst Shigeru Nakane.
“Now that the housing market has bottomed out and that a correction in manufacturing is coming to an end, we want to know how consumer spending and employment are faring,” Nakane said.
Market optimism has grown since US Federal Reserve chief Ben Bernanke said last week that the prospects for a global economic recovery “appear good.”
The falling Chinese stock market meanwhile set the tone, with the yen gaining ground as some investors sought a safe-haven for their cash.
“China’s stock market fell … following comments by the premier on the economy and reports of weaker profits at Chinese companies,” said Barclays Capital analyst Adarsh Sinha.
“It has since recovered more than half of these losses but nonetheless led to the yen and dollar being the best performing currencies overnight.”
Chinese shares closed down 2.59 percent on Tuesday, having recovered about half the day’s losses, in cautious trade a day after Premier Wen Jiabao said the country’s economic situation was “still very grave,” dealers said.
Risk sensitive currencies such as the euro would be the main beneficiaries of any further improvement in market sentiment, while the safe-haven yen and the dollar would probably suffer if stocks extend recent gains.
Chinese growth has held up better than many others due to a massive stimulus package but there are concerns the government could rein this in soon, dampening demand there and in the wider global economy.
Traders were meanwhile cheered by reports that Bernanke is set to be appointed for a second term as Fed chairman.
A White House official said US President Barack Obama would announce the decision later Tuesday.
The reappointment was a “desirable move” that comforted financial markets, Macquarie strategist Rory Robertson told Dow Jones Newswires in Singapore.
In London on Tuesday, the euro was changing hands at 1.4284 dollars against 1.4300 dollars late on Monday, at 134.59 yen (135.22), 0.8728 pounds (0.8710) and 1.5168 Swiss francs (1.5180).
The dollar stood at 94.29 yen (94.56) and 1.0627 Swiss francs (1.0612).
The pound was at 1.6354 dollars (1.6414).
On the London Bullion Market, the price of gold fell to 947.80 dollars an ounce from 951.50 dollars an ounce late on Monday
Tags: Dollar
Financial Services | media, 25 Aug 09 | 
Comments Off
