Dollar Loses More Ground

The dollar expanded its decline after economic data showed that the economy is moving at a slower pace than previously expected. Jobless claims and a slower GDP expansion pace weighs on the US dollar.

APRIL 28, 2011, 12:59 P.M. ET

NEW YORK—The beleaguered dollar extended its broad decline after U.S. economic data pointed to a dismal employment picture and slowing growth, bearing out the Federal Reserve's reluctance to tighten monetary policy anytime soon.

The U.S. Dollar Index was lower for the day, but off the depths it reached overnight.

U.S. jobless claims unexpectedly jumped last week and the government reported the pace of economic growth in the country slowed sharply in the fourth quarter, further adding to the negative dollar sentiment permeating the market.

"There's no fundamental justification to be long dollar right now," said Paresh Upadhyaya, director of G10 FX Strategy at Bank of America-Merrill Lynch in New York.

In midday trade, the euro was at $1.4802 from $1.4794 late Wednesday. The dollar was at ¥81.55 from ¥82.04, while the euro was at ¥120.66 from ¥121.37. The U.K. pound bought $1.6637 from $1.6636, while the dollar traded at 0.8727 Swiss franc from 0.8738 franc.

The ICE U.S. Dollar Index, which touched its lowest levels since August 2008 earlier in the global session, was most recently at 73.253. It ended Wednesday at 73.519 and fell as low as 72.871 overnight.

Traders have been selling the dollar in droves in recent weeks, sending the greenback to multiyear lows against most other major currencies. That selloff continued Wednesday when Federal Reserve Chairman Ben Bernanke indicated the central bank is far from tightening monetary policy. Thursday's economic data provide further justification for the Fed's current policy, analysts said.

First-time claims for unemployment benefits jumped by 25,000 to 429,000, indicating employers might have slowed down their hiring recently. Economists were expecting claims to fall to 395,000. More ominous, the four-week moving average of new claims, considered a better gauge because it smooths out volatility, jumped above 400,000 for the first time since the middle of February. Figures below 400,000 often indicate companies are actively adding to payrolls.

At the same time, gross domestic product rose at a modest 1.8% pace in the first quarter, matching economists' forecasts. However, the pace of expansion is much weaker than it was at the end of 2010, when the economy was growing at a 3.1% pace.

"The data has validated [the Fed's] decision, and it just indicates that the U.S. recovery remains uncertain and fragile, and so the Fed is going to stay on hold," said Brian Dolan, chief currency strategist at in Bedminster, N.J.

Should other central banks continue to raise rates, it would further widen the gulf with the Fed, likely providing a further drag on the dollar, analysts said.

The dollar could get a respite for the rest of this week though, as London is closed Friday for a holiday and traders take some profits after the dollar's recent decline, said Brian Kim, currency strategist at UBS in Stamford, Conn.

To see original article CLICK HERE

Follow Us

Share Page

Weekly Charts

Current Spot Prices


Special Offers

© 2017 Swiss America Trading Corp. All Rights Reserved.   |   Privacy Policy   |   Site Map   |   Contact Us   |   Mobile Version
SWISS AMERICA and Block Logo are registered trademarks of Swiss America Trading Corp.
Where did you hear about us?
Pat BooneMichael Savage
OtherChristopher Greene (AMTV)