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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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From: regli	3/30/2006 2:22:34 PM
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Dollar Falls on Concern U.S. May Shift to Weaker-Dollar Policy bloomberg.com March 30 (Bloomberg) -- The dollar fell versus the euro and yen on concern investors may dump U.S. assets if the Bush administration pursues a policy supporting a weaker currency to help spur economic growth and employment. The dollar recouped some losses after the Treasury Department reiterated that it remains committed to a ``strong dollar'' policy. The New York Times reported today that Joshua Bolten, who will replace Andrew Card as White House chief of staff next month, wants Treasury Secretary John Snow to resign. Snow has been an advocate of a ``strong dollar'' policy. ``The market did react quite negatively to the dollar as this rumor triggered speculation this administration may be giving up its strong dollar policy,'' said Paresh Upadhyaya, who helps manage $29 billion in currency assets at Putnam Investments in Boston. The dollar fell to $1.2136 per euro at 11:33 a.m. in New York from $1.2024 late yesterday. It slumped as low as $1.2155 per euro. The U.S. currency traded at 117.35 yen, from 117.82. ``The administration's policy on the dollar is unchanged,'' Treasury spokesman Tony Fratto said today in Washington. ``A strong dollar is in the national interest. Currency values should be set in open, competitive markets.'' The dollar accelerated its drop against the euro after falling through $1.21, a technical level that triggered sell orders, said Sven Friebe, a currency strategist at Credit Suisse Group in Zurich. The dollar may drop to $1.22 this week, Friebe added. Snow said it is ``not helpful'' to comment on speculation about his future. He spoke after a speech to Edison Electric Institute's board of directors in Washington. The U.S. currency is down 2.4 percent versus the euro and 0.4 percent against the yen this year as traders bet the Federal Reserve is almost finished raising rates. ``Yield spreads are not moving in favor of the dollar,'' said Kamal Sharma, a currency strategist at Bank of America Corp. in London. ``It's a good selling opportunity.''

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