Weak data undermines currency converters
The dollar came off day lows after a key indicator of US consumer confidence came in a touch above expectations, even though the gauge did indeed weaken.
The closely watched consumer confidence index released by the Conference Board fell to 105.0 in August from a downward revision to 111.9 in July. Wise Money had predicted a steeper plunge to 104.5. The recent turmoil in equity and credit markets was no doubt a big negative factor but, to some extent, it will have been offset by the recent declines in gasoline prices.
Yesterday, equities were shaky with key indices in Europe all down, alongside falls on Wall Street. Against this backdrop, currency markets are likely to see bouts of volatility as risk appetites ebb and flow.
Any dollar strength is likely to be inconsistent as long as US data remain weak. Unless we start seeing some very robust signals out of the US, perhaps suggestions that the population is willing to spend its way out of a recession, then further volatility will follow.
The latest dollar-hostile developments include Monday’s existing home sales figures for June, which showed inventories of unsold homes at a 16-year high, and a report in yesterday morning's Times that US bank State Street has 22 bln usd of exposure to debt conduits, the off-balance sheet vehicles that have contributed greatly to the uncertainty in financial markets.
Signs that there are more knock-on-effects to come from the credit crisis have previously helped the dollar as risk sentiment waned, but further bad economic news flow is now fuelling speculation the Federal Reserve will cut interest rates to prevent harm to the wider economy.
The yen has also been volatile, strengthening since Monday as risk appetite is dented by the bad news out of the US. Weakening risk sentiment supports the yen as it means investors refrain from the risky carry trade strategy of selling the low-yielding Japanese currency to invest in higher-yielding ones.
Meanwhile, the euro stayed well bid after a stronger-than-expected key German business survey and robust money supply figures for the 13-nation single currency area.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
The closely watched consumer confidence index released by the Conference Board fell to 105.0 in August from a downward revision to 111.9 in July. Wise Money had predicted a steeper plunge to 104.5. The recent turmoil in equity and credit markets was no doubt a big negative factor but, to some extent, it will have been offset by the recent declines in gasoline prices.
Yesterday, equities were shaky with key indices in Europe all down, alongside falls on Wall Street. Against this backdrop, currency markets are likely to see bouts of volatility as risk appetites ebb and flow.
Any dollar strength is likely to be inconsistent as long as US data remain weak. Unless we start seeing some very robust signals out of the US, perhaps suggestions that the population is willing to spend its way out of a recession, then further volatility will follow.
The latest dollar-hostile developments include Monday’s existing home sales figures for June, which showed inventories of unsold homes at a 16-year high, and a report in yesterday morning's Times that US bank State Street has 22 bln usd of exposure to debt conduits, the off-balance sheet vehicles that have contributed greatly to the uncertainty in financial markets.
Signs that there are more knock-on-effects to come from the credit crisis have previously helped the dollar as risk sentiment waned, but further bad economic news flow is now fuelling speculation the Federal Reserve will cut interest rates to prevent harm to the wider economy.
The yen has also been volatile, strengthening since Monday as risk appetite is dented by the bad news out of the US. Weakening risk sentiment supports the yen as it means investors refrain from the risky carry trade strategy of selling the low-yielding Japanese currency to invest in higher-yielding ones.
Meanwhile, the euro stayed well bid after a stronger-than-expected key German business survey and robust money supply figures for the 13-nation single currency area.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
posted by Drs Search @ 8:40 AM
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