Dollar Prolongs Decline
May 5th, 2009 | By Doug Casey | Category: US Dollar & Forex TradingIn the currency market, the dollar was down once again against the euro. Late Monday, the euro was trading at $1.3365, the highest level in almost a month, vs. $1.3268 on Friday.
Good news for the economy turned out to be bad for the buck, as pending home sales rose in March, buoying hopes that the housing downturn may be ending.
The National Association of Realtors said pending sales increased 3.2% in March, more than analysts had been anticipating.
“This is the second month in a row that pending home sales have increased which adds to the overall belief that we are seeing serious signs of stabilization,” said Kathy Lien, director of currency research at Global Forex Trading.
Also factoring in, “Another Wall Street rally is largely seen behind the softer dollar, as risk appetite remains at more elevated levels,” analysts at Action Economics said.
“When risk aversion declines, stocks do well, the dollar falls, the Japanese yen does worse — and everything else improves,” said David Watt, senior currency strategist at RBC Capital Markets.
The common currency benefited from a report that the pace of slowdown in euro zone manufacturing activity slowed in April, according to data from Markit Economics.
The purchasing managers’ index for the eurozone rose to a six-month high of 36.8 in April from 33.9 in March. While readings below 50 are still indicative of contraction in the sector, the report surprised economists, who had forecast the PMI to remain flat.
Source: Dollar Prolongs Decline
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