Dollar Heads for Biggest Weekly Drop Against Euro in Six Months
14/11/2003 12:23
The dollar fell against the euro in London, heading for its biggest weekly drop in six months, after the U.S. trade deficit widened and Europe's biggest economies returned to growth.
The trade deficit widened in September for the first time since March, the government said yesterday, meaning more dollars must be sold to pay for imports. Italy's economy emerged from recession, the government said today, joining Germany and France in expansion.
``We see the dollar further going down,'' Cees Maas, chief financial officer of ING Groep NV, the biggest Dutch financial services company, said in a televised interview with Bloomberg News.
Against the euro, the dollar fell to $1.1781 at 9:13 a.m. in London from $1.1734 late yesterday in New York, down 2.3 percent this week. The currency shared by a dozen European Union nations has climbed 12 percent this year against its U.S. counterpart.
The U.S. trade deficit widened to $41.3 billion in September from $39.5 billion in August. The median forecast of economists surveyed by Bloomberg News was for the gap to narrow. Retail sales may have declined last month, said economists polled separately.
The Commerce Department will release the figures at 8:30 a.m. in Washington. Gross domestic product in the dozen nations sharing the euro probably rose 0.2 percent in the third quarter, the EU's statistics office may say in a report at noon Brussels time.
``It's a combination of major factors that has caused dollar weakness,'' said Neil Jones, director of foreign exchange at Nomura International Plc in London. ``It's an accumulation of slightly disappointing data, interest rate differentials, the trade deficit and the geopolitical situation.''
Iraq Team Delayed
Ousted Iraqi leader Saddam Hussein and his generals may have planned all along for a guerrilla war, the Washington Post reported yesterday, citing Major General Charles Swannack, commander of the 82nd Airborne Division.
Japan, which was preparing to send a 150-member advance team to Iraq next month and as many as 550 soldiers early next year, may delay the deployment because of the growing number of attacks, chief government spokesman Yasuo Fukuda said yesterday.
The growing reluctance of investors to hold dollars is spurring a rally in gold. New York gold futures have jumped almost 14 percent this year. Gold for December delivery rose to $396 an ounce on the Comex division of the New York Mercantile Exchange at 12:47 p.m. Sydney time.
``The dollar is broken,'' said Peter Clay, a currency strategist in Sydney at ABN Amro Holding NV. ``As evidenced by the trade balance last night, the appetite in the U.S. for foreign capital is accelerating.''
Retail Sales
The dollar may weaken further on concern Americans bought fewer autos in October and reined in purchases at stores after spending at the fastest pace in six years during the past three months.
Retail sales may have declined 0.2 percent, according to the median of 68 forecasts in a Bloomberg News survey of economists. Excluding motor vehicles, sales may have risen at a slower pace than in the month before.
The dollar was at 108.08 yen from 108.11, down 1.2 percent this week. Japan's economy expanded for a seventh quarter, the longest expansion in six years, the government said today.
Gross domestic product rose 0.6 percent in the third quarter from the second, the government said. The rate compares with the median forecast of a 0.3 percent gain in a Bloomberg News survey of 38 economists.
BOJ May Sell
``Buying of yen will continue on hopes of Japan's economic recovery,'' said Tohru Sasaki, a currency strategist in Tokyo at J.P. Morgan Chase & Co., and a former Bank of Japan official. The yen may strengthen to 107 per dollar by the end of this month and 105 by year- end, Sasaki said.
Its advance has been limited by speculation the Bank of Japan will sell yen to protect exporters. The BOJ, at the behest of the Ministry of Finance, sold a record 16.2 trillion yen ($149.8 billion) from January through October.
Foreign central-bank holdings of Treasury and agency securities in accounts at the Federal Reserve rose in the week ended yesterday to $1 trillion, Fed figures showed. The BOJ ``could sell at any time,'' said Shogo Nagaya, foreign exchange manager in Tokyo at Nomura Trust & Banking Co., a unit of Japan's largest brokerage.
Japan is ready to ``take appropriate action on the currency's irregular moves,'' Finance Minister Sadakazu Tanigaki said at a regular press conference, adding the yen's gain over the past two months is ``a bit'' rapid.
``Excessive moves and overshooting is unwelcome,'' Zembei Mizoguchi, vice finance minister for international affairs, also told reporters in Tokyo.
The trade deficit widened in September for the first time since March, the government said yesterday, meaning more dollars must be sold to pay for imports. Italy's economy emerged from recession, the government said today, joining Germany and France in expansion.
``We see the dollar further going down,'' Cees Maas, chief financial officer of ING Groep NV, the biggest Dutch financial services company, said in a televised interview with Bloomberg News.
Against the euro, the dollar fell to $1.1781 at 9:13 a.m. in London from $1.1734 late yesterday in New York, down 2.3 percent this week. The currency shared by a dozen European Union nations has climbed 12 percent this year against its U.S. counterpart.
The U.S. trade deficit widened to $41.3 billion in September from $39.5 billion in August. The median forecast of economists surveyed by Bloomberg News was for the gap to narrow. Retail sales may have declined last month, said economists polled separately.
The Commerce Department will release the figures at 8:30 a.m. in Washington. Gross domestic product in the dozen nations sharing the euro probably rose 0.2 percent in the third quarter, the EU's statistics office may say in a report at noon Brussels time.
``It's a combination of major factors that has caused dollar weakness,'' said Neil Jones, director of foreign exchange at Nomura International Plc in London. ``It's an accumulation of slightly disappointing data, interest rate differentials, the trade deficit and the geopolitical situation.''
Iraq Team Delayed
Ousted Iraqi leader Saddam Hussein and his generals may have planned all along for a guerrilla war, the Washington Post reported yesterday, citing Major General Charles Swannack, commander of the 82nd Airborne Division.
Japan, which was preparing to send a 150-member advance team to Iraq next month and as many as 550 soldiers early next year, may delay the deployment because of the growing number of attacks, chief government spokesman Yasuo Fukuda said yesterday.
The growing reluctance of investors to hold dollars is spurring a rally in gold. New York gold futures have jumped almost 14 percent this year. Gold for December delivery rose to $396 an ounce on the Comex division of the New York Mercantile Exchange at 12:47 p.m. Sydney time.
``The dollar is broken,'' said Peter Clay, a currency strategist in Sydney at ABN Amro Holding NV. ``As evidenced by the trade balance last night, the appetite in the U.S. for foreign capital is accelerating.''
Retail Sales
The dollar may weaken further on concern Americans bought fewer autos in October and reined in purchases at stores after spending at the fastest pace in six years during the past three months.
Retail sales may have declined 0.2 percent, according to the median of 68 forecasts in a Bloomberg News survey of economists. Excluding motor vehicles, sales may have risen at a slower pace than in the month before.
The dollar was at 108.08 yen from 108.11, down 1.2 percent this week. Japan's economy expanded for a seventh quarter, the longest expansion in six years, the government said today.
Gross domestic product rose 0.6 percent in the third quarter from the second, the government said. The rate compares with the median forecast of a 0.3 percent gain in a Bloomberg News survey of 38 economists.
BOJ May Sell
``Buying of yen will continue on hopes of Japan's economic recovery,'' said Tohru Sasaki, a currency strategist in Tokyo at J.P. Morgan Chase & Co., and a former Bank of Japan official. The yen may strengthen to 107 per dollar by the end of this month and 105 by year- end, Sasaki said.
Its advance has been limited by speculation the Bank of Japan will sell yen to protect exporters. The BOJ, at the behest of the Ministry of Finance, sold a record 16.2 trillion yen ($149.8 billion) from January through October.
Foreign central-bank holdings of Treasury and agency securities in accounts at the Federal Reserve rose in the week ended yesterday to $1 trillion, Fed figures showed. The BOJ ``could sell at any time,'' said Shogo Nagaya, foreign exchange manager in Tokyo at Nomura Trust & Banking Co., a unit of Japan's largest brokerage.
Japan is ready to ``take appropriate action on the currency's irregular moves,'' Finance Minister Sadakazu Tanigaki said at a regular press conference, adding the yen's gain over the past two months is ``a bit'' rapid.
``Excessive moves and overshooting is unwelcome,'' Zembei Mizoguchi, vice finance minister for international affairs, also told reporters in Tokyo.
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