Forex - Dollar soft on geopolitical concerns ahead of key US housing data |
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Tue, 27 Feb 2007 14:13
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LONDON (AFX) - The dollar remained near its 2007 low against the euro amid concerns over Iran's nuclear intentions and ahead of some crucial US housing data later today.The geopolitical concerns engendered by the stand-off with Iran were exacerbated by the overnight suicide blast at the US base in Afghanistan where US Vice President Dick Cheney was visiting.Given the speculation that this week's raft of US economic data will paint a relatively downbeat picture of the world's largest economy, the tensions have added to the softness in the dollar.'The dollar is testing two-month lows against the euro as concerns over the situation in Iran continue to weigh,' said David Jones, chief markets analyst at CMC Markets.The US currency is also being hit by concerns about the US economic outlook.The economic calendar for this week kicks off today with durable goods orders for January, but the markets will pay more attention to the ensuing January existing homes sales and February consumer confidence data.'Durable goods are the prelude to more potentially dollar negative US data today,' Commerzbank Corporates & Markets analyst Gavin Friend said.He said US consumer confidence is likely to come in lower while unfavourable weather conditions are likely to see existing homes sales disappoint during January.'All in all news that are likely to support a steady dollar decline pip by pip, (with the euro moving up) towards 1.3250 usd,' he added.Concerns about the US economy were stoked overnight when former US Federal Reserve chairman Alan Greenspan warned that there were signs that the current economic cycle was coming to an end and that a recession by the end of the year is possible.The Fed has kept its benchmark rate unchanged at 5.25 pct for four consecutive meetings after previously raising it 17 times in a row. Towards the end of last year, the dollar slumped on mounting talk of an easing in policy following a raft of disappointing activity news.While the Fed is on hold, the European Central Bank is expected to carry on raising borrowing costs for some months to come and that is further helping the euro against the dollar. The ECB is expected to lift its key refi rate a quarter point twice more this year at the least to 4.00 pct.Today's euro zone money supply data further reinforced expectations of at least two more rate hikes.The M3 measure rose by a 17-year high of 9.8 pct in the year to January, against expectations of a 9.5 pct rise.'This should reinforce the ECB's case for a further rate hike next month,' said Bear Stearns analyst David Brown.'The ECB is bound to have its sights set on 4 pct rates by June,' he added.London 1247 GMT London 0908 GMTUS dollaryen 119.35 down from 119.52sfr 1.2238 down from 1.2239Eurousd 1.3217 up from 1.3213yen 157.68 down from 157.93sfr 1.6181 up from 1.6174stg 0.6730 up from 0.6725Sterlingusd 1.9635 down from 1.9647yen 234.20 down from 234.81sfr 2.4034 down from 2.4047Australian dollarusd 0.7919 down from 0.7923stg 0.4031 down from 0.4032yen 94.47 down from 94.76pan.pylas@thomson.compp/jrCOPYRIGHTCopyright AFX News Limited 2007. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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FOCUS Global markets get taste of risk appetite reversal 