Dollar resumes downtrend against euro
The dollar sagged against the euro Tuesday ahead of US housing data that will provide the latest reading on the health of the troubled American economy, dealers said.
The foreign exchange market is also eyeing interest rate decisions due Thursday from the Bank of England (BoE) and the European Central Bank (ECB).
In late morning European trade on Tuesday, the euro advanced to 1.4720 dollars from 1.4691 dollars in New York late on Monday.
The dollar climbed to 109.59 yen from 109.13 yen late Monday.
In the commodity markets, gold soared to a fresh historic record of 876 dollars per ounce on Tuesday owing to rebounding oil prices, a weak dollar and geopolitical tensions, traders said.
A falling US dollar makes gold cheaper for buyers using stronger currencies, they added.
Later Tuesday, dealers were to absorb the US pending home sales index for November -- which could reveal that the country’s housing slump is not over yet, analysts said.
‘The world remains focused on the prospects of a US recession,’ said Tim Condon, research head at ING Financial Markets.
‘Most investors are waiting on what the Fed’s next move will be.’
Recent weak US economic data has fuelled fears of a recession in the world’s biggest economy and sparked speculation that the US Federal Reserve could slash American interest rates next month, analysts said.
Traders were also looking ahead to a speech Thursday in Washington by Fed chairman Ben Bernanke on the economic outlook, dealers said.
Investors will hunt for hints on how much the US central bank might cut rates in an effort to stave off a recession, following recent signs of weakness in the labour market, they added.
The US central bank’s key interest rate currently stands at 4.25 percent.
European Central Bank policymakers, meanwhile, were expected to hold rates steady at 4.0 percent on Thursday as inflation remains a concern, dealers said.
‘Market players are sceptical about the prospects of rate hikes in the eurozone,’ given the problems in the US economy and the worries that it may spill over to Europe, said ING’s Condon.
With the ECB worries about inflation, it is ‘not going to be in a tightening mood,’ he added.
The Bank of England’s decision, meanwhile, is expected to be a close call amid ongoing financial uncertainty over the global credit squeeze and the troubled US economy.
However, a small but growing number of analysts are predicting a quarter-point rate cut for the second month in a row, to 5.25 percent.
In European trading on Tuesday, the euro changed hands at 1.4720 dollars against 1.4691 late Monday, at 161.27 yen (160.37), 0.7435 pounds (0.7456) and 1.6427 Swiss francs (1.6405).
The dollar stood at 109.59 yen (109.13) and 1.1164 Swiss francs (1.1165).
The pound was at 1.9803 dollars (1.9699).
On the London Bullion Market, the price of gold later stood at 872.91 dollars an ounce, from 859.25 dollars late on Monday. Source
The foreign exchange market is also eyeing interest rate decisions due Thursday from the Bank of England (BoE) and the European Central Bank (ECB).
In late morning European trade on Tuesday, the euro advanced to 1.4720 dollars from 1.4691 dollars in New York late on Monday.
The dollar climbed to 109.59 yen from 109.13 yen late Monday.
In the commodity markets, gold soared to a fresh historic record of 876 dollars per ounce on Tuesday owing to rebounding oil prices, a weak dollar and geopolitical tensions, traders said.
A falling US dollar makes gold cheaper for buyers using stronger currencies, they added.
Later Tuesday, dealers were to absorb the US pending home sales index for November -- which could reveal that the country’s housing slump is not over yet, analysts said.
‘The world remains focused on the prospects of a US recession,’ said Tim Condon, research head at ING Financial Markets.
‘Most investors are waiting on what the Fed’s next move will be.’
Recent weak US economic data has fuelled fears of a recession in the world’s biggest economy and sparked speculation that the US Federal Reserve could slash American interest rates next month, analysts said.
Traders were also looking ahead to a speech Thursday in Washington by Fed chairman Ben Bernanke on the economic outlook, dealers said.
Investors will hunt for hints on how much the US central bank might cut rates in an effort to stave off a recession, following recent signs of weakness in the labour market, they added.
The US central bank’s key interest rate currently stands at 4.25 percent.
European Central Bank policymakers, meanwhile, were expected to hold rates steady at 4.0 percent on Thursday as inflation remains a concern, dealers said.
‘Market players are sceptical about the prospects of rate hikes in the eurozone,’ given the problems in the US economy and the worries that it may spill over to Europe, said ING’s Condon.
With the ECB worries about inflation, it is ‘not going to be in a tightening mood,’ he added.
The Bank of England’s decision, meanwhile, is expected to be a close call amid ongoing financial uncertainty over the global credit squeeze and the troubled US economy.
However, a small but growing number of analysts are predicting a quarter-point rate cut for the second month in a row, to 5.25 percent.
In European trading on Tuesday, the euro changed hands at 1.4720 dollars against 1.4691 late Monday, at 161.27 yen (160.37), 0.7435 pounds (0.7456) and 1.6427 Swiss francs (1.6405).
The dollar stood at 109.59 yen (109.13) and 1.1164 Swiss francs (1.1165).
The pound was at 1.9803 dollars (1.9699).
On the London Bullion Market, the price of gold later stood at 872.91 dollars an ounce, from 859.25 dollars late on Monday. Source
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