Dollar Edges Higher
Posted on: May 12th, 2009 | By Doug Casey | Filed under US Dollar & Forex Trading
In the currency market, the dollar moved higher against the euro. Late Monday, the euro was trading at $1.3589 vs. $1.3627 on Friday.
The buck gained amid a modestly growing risk aversion, as appetite for equities and other less safe options eased.
“Today we have seen some profit taking after strong moves leading into the [New York] close … The move does not appear to be news driven, but more simply a rest after Friday,” wrote Camilla Sutton, of Scotia Bank in Toronto.
Even though the dollar broke below important support levels last week, some analysts were warning that it may well have further to fall as the idea that the global economy is beginning to bottom out takes hold.
Strategists noted that the euro and several other currencies broke through important resistance at their 200-day moving averages versus the dollar on Friday. “This is an important milestone and foreshadows that even if there are pull backs there is renewed downward pressure on the U.S. dollar,” Sutton said.
Meanwhile, March industrial production data for France and Italy showed larger-than-expected declines, reinforcing expectations for a steep drop in first-quarter euro-zone GDP.
“The upshot is that the euro-zone economy will contract much more sharply this year than the consensus forecast of 3.4%, probably to the tune of 5%,” said Daniele Antonucci, European economist at Capital Economics.
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