gst, now it's really over. See this:
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Friday July 30, 12:50 pm Eastern Time
(Note: this article is ''in progress''; there will likely be an update soon.)
Dollar wilts in US as mkt nervous about capital flows
NEW YORK, July 30 (Reuters) - The dollar wilted against the Japanese yen and barely held its ground against the euro in
morning U.S. trade on Friday as dealers said the economic tide appears to be turning against the United States.
''There is a concern that capital flows into the United States are going to be somewhat suspect going forward,'' Citibank
strategist Bob Sinche said, explaining that an uptick in U.S. inflationary pressures may force the Federal Reserve to tighten
rates again which would dent asset prices more.
In turn, investors may stop funneling money into the U.S. at time capital is needed to cover the current account deficit.
New economic data, like a regional manufacturing report from the Chicago area and June consumer income and spending data, on Friday underscored the
picture of a strong economy struggling with a tight labor market and rising wages.
June personal income jumped a stronger than expected 0.7 percent, while spending rose 0.3 percent and the savings rate fell 1 percent. The Chicagoland
Business Barometer rose to a seasonally adjusted 60.5 in July from 60.0 in June, again marking a stronger than expected rise.
On Thursday, a 1.1 percent jump in second quarter employment costs pummeled Wall Street. Sales continued Friday.
Although the Dow Jones industrial average was off only about 55 points at noon after Thursday's 180 point loss, dealers said the selling weighed on the dollar all
the same.
The dollar smashed through Thursday's 114.89 yen trough to hit a new five-month low of 114.62 -- barely above crucial support at 114.50/55 yen -- a 61.8
percent Fibonacci retracement of the entire rally from the year's lows near 108 to the highs near 125.
Dealers ignored news that Japan had posted record high June unemployment at 4.9 percent and a fall in wage-earner spending and preferred to eye stimulus
measures which may boost growth.
''The Japanese have been busy talking about fiscal stimulus measures and there may be some sense that there is real change under way in Japan,'' a dealer said.
At noon, dollar/yen stood at 114.82/92, down from 115.12/22 at the start. Meanwhile, euro/dollar stood at $1.0690/97, nearly unchanged from $1.0691/96 at
the start.
Dealers said the euro's gains may have been capped by strong euro/yen selling, leaving the pair near 122.60 after midday and off the 123.24 level seen this
morning.
As the dollar has now lost about 2 percent in value against the yen since Monday, fears of possible intervention heated up. |
