Dollar struggles after weak US housing data
Friday, 19 October 2007
TOKYO, Oct 18 (AFP): The dollar remained under pressure in Asian trade today, hit by weak US housing data and jitters ahead of a meeting of world finance chiefs where currencies will be on the agenda, dealers said.
They said the dollar was also weighed down by high oil prices and concerns about a possible Turkish incursion against Kurds in northern Iraq.
The euro rose to 1.4238 dollars in Tokyo afternoon trade compared with 1.4202 in New York late Wednesday.
The single European currency gained to 165.98 yen from 165.75 while the dollar was steady at 116.58 yen after 116.57.
"The dollar remains weak," said Resona Bank currency sales client manager Nobuaki Tani, noting fresh signs of weakness in the US housing market.
The US Commerce Department said Wednesday housing starts and permits for future construction fell in September to a 14-year low, with a 10.2 per cent drop in starts from August.
"The market had expected the data would be weak to some extent, but it rekindled expectations of a further cut in US interest rates," Tani said.
Thomas Lam, treasury economist at United Overseas Bank in Hong Kong, said "the readiness is still there that the Fed will reduce rates (again) by the fourth quarter."
The International Monetary Fund also downgraded its forecasts for US and global economic growth next year, weighing on the dollar.
Although the global market rout in August sparked by problems with US subprime loans has subsided, nervousness remains about the US housing downturn and the ongoing fallout from credit tightening, dealers said.
They said the dollar was also weighed down by high oil prices and concerns about a possible Turkish incursion against Kurds in northern Iraq.
The euro rose to 1.4238 dollars in Tokyo afternoon trade compared with 1.4202 in New York late Wednesday.
The single European currency gained to 165.98 yen from 165.75 while the dollar was steady at 116.58 yen after 116.57.
"The dollar remains weak," said Resona Bank currency sales client manager Nobuaki Tani, noting fresh signs of weakness in the US housing market.
The US Commerce Department said Wednesday housing starts and permits for future construction fell in September to a 14-year low, with a 10.2 per cent drop in starts from August.
"The market had expected the data would be weak to some extent, but it rekindled expectations of a further cut in US interest rates," Tani said.
Thomas Lam, treasury economist at United Overseas Bank in Hong Kong, said "the readiness is still there that the Fed will reduce rates (again) by the fourth quarter."
The International Monetary Fund also downgraded its forecasts for US and global economic growth next year, weighing on the dollar.
Although the global market rout in August sparked by problems with US subprime loans has subsided, nervousness remains about the US housing downturn and the ongoing fallout from credit tightening, dealers said.