Dollar Loses Ground; Caution Over Growth
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Dollar Loses Ground; Caution Over Growth
Dollar Loses Ground; Caution Over Growth
Friday, July 25, 2003 6:02 a.m. ET
By Natsuko Waki
LONDON (Reuters) - The dollar gave up ground against the euro heading toward the previous session's three-week low on Friday as investors grew cautious about the outlook for the U.S. recovery ahead of a key U.S. durable goods report.
Stronger than expected weekly jobless claims data out on Thursday gave the greenback temporary relief, pushing it away from the low beyond $1.1510 but losses on Wall Street and in Tokyo and Europe injected caution about recovery prospects.
Later on Friday, June durable goods orders due at 12:30 p.m. GMT offer a potential boost to the dollar if the data confirm expectations of an improvement.
"The market is unwinding its optimistic sentiment toward growth and equities. Investors are looking for a bounce back in durable goods and expectations are high," said Fatih Yilmaz, senior FX strategist at Bank of America.
By 9:45 a.m. GMT, the dollar erased early gains to stand weaker on the day at $1.1498, having hit a three-week low at $1.1511 in the previous session.
Against the yen, the greenback fell off session highs at 119.30 yen to stand unchanged on the day 118.95.
Recent inflows into Japan seem to have slowed down with data showing foreign investors' net purchase of Japanese stocks totaled about 200 billion yen ($1.68 billion) last week, but that was much smaller than 550 billion yen a week earlier.
HOPES AND CAUTION
The dollar was torn between hopes for a stronger economy in the United States and disappointing stock markets.
U.S. stock futures were pointing to a steady to higher open on Wall Street later in the day.
Analysts expect U.S. durable good orders data to show a bounce in June after the new orders component was strong in the June Institute of Supply Management index.
Durable goods are seen as a good indicator of future production and hiring trends. A Reuters poll predicted a one percent rise in June after a 0.4 percent fall in goods orders in May.
Next week, the economic data schedule is packed, with consumer confidence and gross domestic product growth figures and manufacturing surveys topping the agenda.
"The backdrop is now a whole lot of data coming in next week so the market is consolidating a little ahead of that," said Ian Gunner, head of foreign exchange research at Mellon Bank in London.
"The durable goods data offers potential for a knee-jerk reaction." Later in the day Federal Reserve Bank of Richmond's Alfred Broaddus, a voter on the Fed's policy panel this year, is to speak about the current economic situation at 3 p.m. GMT.
Most recently he said deflation was not an imminent threat to the U.S. economy but policymakers must strive to make sure it does not emerge.
Copyright © 2003 Reuters Limited.
Friday, July 25, 2003 6:02 a.m. ET
By Natsuko Waki
LONDON (Reuters) - The dollar gave up ground against the euro heading toward the previous session's three-week low on Friday as investors grew cautious about the outlook for the U.S. recovery ahead of a key U.S. durable goods report.
Stronger than expected weekly jobless claims data out on Thursday gave the greenback temporary relief, pushing it away from the low beyond $1.1510 but losses on Wall Street and in Tokyo and Europe injected caution about recovery prospects.
Later on Friday, June durable goods orders due at 12:30 p.m. GMT offer a potential boost to the dollar if the data confirm expectations of an improvement.
"The market is unwinding its optimistic sentiment toward growth and equities. Investors are looking for a bounce back in durable goods and expectations are high," said Fatih Yilmaz, senior FX strategist at Bank of America.
By 9:45 a.m. GMT, the dollar erased early gains to stand weaker on the day at $1.1498, having hit a three-week low at $1.1511 in the previous session.
Against the yen, the greenback fell off session highs at 119.30 yen to stand unchanged on the day 118.95.
Recent inflows into Japan seem to have slowed down with data showing foreign investors' net purchase of Japanese stocks totaled about 200 billion yen ($1.68 billion) last week, but that was much smaller than 550 billion yen a week earlier.
HOPES AND CAUTION
The dollar was torn between hopes for a stronger economy in the United States and disappointing stock markets.
U.S. stock futures were pointing to a steady to higher open on Wall Street later in the day.
Analysts expect U.S. durable good orders data to show a bounce in June after the new orders component was strong in the June Institute of Supply Management index.
Durable goods are seen as a good indicator of future production and hiring trends. A Reuters poll predicted a one percent rise in June after a 0.4 percent fall in goods orders in May.
Next week, the economic data schedule is packed, with consumer confidence and gross domestic product growth figures and manufacturing surveys topping the agenda.
"The backdrop is now a whole lot of data coming in next week so the market is consolidating a little ahead of that," said Ian Gunner, head of foreign exchange research at Mellon Bank in London.
"The durable goods data offers potential for a knee-jerk reaction." Later in the day Federal Reserve Bank of Richmond's Alfred Broaddus, a voter on the Fed's policy panel this year, is to speak about the current economic situation at 3 p.m. GMT.
Most recently he said deflation was not an imminent threat to the U.S. economy but policymakers must strive to make sure it does not emerge.
Copyright © 2003 Reuters Limited.
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