Dollar Plunges Against Euro
Jun 24th, 2009 | By Doug Casey | Category: US Dollar & Forex TradingIn the currency market, the dollar was hammered against the euro. Late Tuesday, the euro was trading at $1.4089 vs. $1.3864 on Monday.
“The stock market and the broader green shoots rally appeared to have lost some momentum last week,” said Michael Woolfolk, of the Bank of New York Mellon. “But it appears that risk aversion is off the table for the time being and players are looking to the FOMC meeting …”
At the conclusion of its meeting today, the FOMC is almost universally expected to leave its fed funds rate target in a range of 0% to 0.25%. However, investors will be watching to see whether the central bank makes any changes to its Treasury and mortgage asset-purchase program, with an eye toward further boosting liquidity.
Also on traders’ radar are the U.S. Treasury Department’s three big note sales this week, says Dan Cook, of IG Markets. “It will be important to watch how well these auctions are subscribed by indirect bidders — a category that includes foreign central banks,” Cook wrote. “Strong demand could bode well for a strong dollar as investors move back into dollar-denominated assets.”
The day’s only number was a National Association of Realtors report which said sales of existing homes rose only 2.4% in May, to an annual rate of 4.77 million units, from a downwardly revised 4.66 million pace in April. Economists had been looking for a 4.81 million-unit pace.
“Overall it’s weaker than expected, but does show we’re trying to carve out a bottom here. The foreclosure portion of sales is slowing down at least. One month’s supply for single family homes is back down to the low for the year, so that’s also a welcome sign. I don’t know that it’s a green shoot. It seems to be more of a stabilization in the housing market,” said Jacob Oubina, currency strategist with Forex.com.
Investors ignored a weaker-than-expected rise in the euro-zone purchasing managers index for June. The Markit euro-zone composite PMI rose to 44.4 in June from 44.0 in May, worse than a projected rise to 45.5. Anything under 50 indicates contraction.
Source: Dollar Plunges Against Euro
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