Dollar eases against euro before more US housing data
Friday, 26 October 2007
LONDON,Oct 25 (AFP): The dollar edged lower against the European single currency on Thursday ahead of another reading on the beleaguered US housing market.
The euro firmed to 1.4268 dollars in early European trade from 1.4264 dollars in New York late Wednesday.
Forex market participants will focus later Thursday on new home sales data out of the United States, ahead of an interest rate decision from the US Federal Reserve next Wednesday.
Dealers will be on the lookout for further evidence on the extent of the slowdown in the US housing sector after a sharp drop in existing home sales.
"The Fed hardly needs any further excuses to cut interest rates next week but today's housing data should seal the case for a 25 basis points rate cut," said Calyon analyst Mitul Kotecha.
"Housing data over recent weeks has been truly awful, with most releases falling below market expectations."
Dollar sentiment was hit Wednesday by more negative data and news of severe losses at Wall Street giant Merrill Lynch linked to recent problems in the home loan and credit markets.
The National Association of Realtors Wednesday reported a steeper-than-expected eight per cent slide in existing US home sales, heightening concerns about the outlook for the world's largest economy.
The Fed is now widely expected to lower its benchmark lending rate at its two-day meeting next week from the current 4.75 per cent.
"A lot of investors have changed their views and are now betting that the Fed will lower its interest rates by end of the month," said Daniel Chan, senior investment strategist at DBS Bank.
The Fed slashed rates last month by a hefty 50 basis points, its first cut in more than four years, causing investors to dump the dollar, which fell to record lows against major currencies, including the euro.
Elsewhere Thursday, dealers were digesting fresh news from Germany -- which is the biggest economy in the 13-nation eurozone.
German business confidence slipped for the sixth month in October, as companies took a somewhat dimmer view of the six-month outlook, a key survey showed Thursday.
The widely watched business climate index, calculated each month by the Munich-based economic research institute Ifo, fell to 103.9 points from 104.2 points in September.
A consensus forecast by analysts polled by Thomson Financial News had expected a slightly bigger fall to 103.8 points.
In European trade Thursday, the euro changed hands at 1.4268 dollars, against 1.4264 dollars late Wednesday, at 163.02 yen (162.97), 0.6967 pounds (0.6959) and 1.6700 Swiss francs (1.6717).
The euro firmed to 1.4268 dollars in early European trade from 1.4264 dollars in New York late Wednesday.
Forex market participants will focus later Thursday on new home sales data out of the United States, ahead of an interest rate decision from the US Federal Reserve next Wednesday.
Dealers will be on the lookout for further evidence on the extent of the slowdown in the US housing sector after a sharp drop in existing home sales.
"The Fed hardly needs any further excuses to cut interest rates next week but today's housing data should seal the case for a 25 basis points rate cut," said Calyon analyst Mitul Kotecha.
"Housing data over recent weeks has been truly awful, with most releases falling below market expectations."
Dollar sentiment was hit Wednesday by more negative data and news of severe losses at Wall Street giant Merrill Lynch linked to recent problems in the home loan and credit markets.
The National Association of Realtors Wednesday reported a steeper-than-expected eight per cent slide in existing US home sales, heightening concerns about the outlook for the world's largest economy.
The Fed is now widely expected to lower its benchmark lending rate at its two-day meeting next week from the current 4.75 per cent.
"A lot of investors have changed their views and are now betting that the Fed will lower its interest rates by end of the month," said Daniel Chan, senior investment strategist at DBS Bank.
The Fed slashed rates last month by a hefty 50 basis points, its first cut in more than four years, causing investors to dump the dollar, which fell to record lows against major currencies, including the euro.
Elsewhere Thursday, dealers were digesting fresh news from Germany -- which is the biggest economy in the 13-nation eurozone.
German business confidence slipped for the sixth month in October, as companies took a somewhat dimmer view of the six-month outlook, a key survey showed Thursday.
The widely watched business climate index, calculated each month by the Munich-based economic research institute Ifo, fell to 103.9 points from 104.2 points in September.
A consensus forecast by analysts polled by Thomson Financial News had expected a slightly bigger fall to 103.8 points.
In European trade Thursday, the euro changed hands at 1.4268 dollars, against 1.4264 dollars late Wednesday, at 163.02 yen (162.97), 0.6967 pounds (0.6959) and 1.6700 Swiss francs (1.6717).