Talking Heads and Monkeys - so which is which ?
Dollar May Drop Against Euro, Survey Indicates (Bloomberg News)
Monday, July 28, 2003
quote.bloomberg.com
The dollar may fall against the euro for a second week on concern the U.S. economy isn't growing at a pace that attracts enough overseas investment to compensate for a record trade deficit, a Bloomberg News survey showed.
A majority of the 38 analysts, traders and investors surveyed from Tokyo to New York on Friday recommended selling the U.S. currency against the euro after the dollar had its biggest weekly drop in two months.
The dollar strengthened to $1.1474 per euro at 1:18 p.m. in Tokyo from $1.1507 late Friday in New York, when it completed its biggest weekly decline in two months. The dollar also rose to 119.10 yen from 118.77.
"The bias is generally lower for the U.S. dollar,'' Michael Jansen, a currency strategist in Sydney at National Australia Bank Ltd., the country's largest lender, told Bloomberg News in a television interview. "The current account deficit is the No. 1 negative.'' The dollar may fall to $1.17 per euro in the next three months, Jansen said.
A report tomorrow will probably show improved U.S. consumer confidence, and a report Friday may show the U.S. jobless rate declined to 6.3 percent in June from a nine-year high of 6.4 percent in May, according to economists surveyed by Bloomberg News.
'Dollar Will Struggle'
At the same time, demand for Treasuries and the dollars needed to buy them may wane amid government sales this week. Ten- year Treasury notes had their biggest two-week decline since November 2001.
"Even if the data are strong, we still believe the dollar will struggle,'' said Daniel Katzive, a currency strategist at UBS AG in Stamford, Connecticut, the biggest trader in the daily $1.2 trillion foreign exchange market, according to Euromoney magazine.
Katzive, a participant in the survey, recommended investors buy the euro against the dollar this week. The U.S. currency may weaken to $1.18 per euro in coming days, and to $1.25 per euro by the end of the year, he said. It's down 8.6 percent this year.
The U.S. needs to attract about $1.5 billion a day of foreign investment to offset its current-account deficit, the broadest measure of trade, which widened to a record $503 billion last year. The euro region's deficit was 8.1 billion euros in April, and Japan has a surplus.
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Dollar May Strengthen on Optimism U.S. Growth Will Pick Up (Bloomberg News)
Tuesday, July 29, 2003
quote.bloomberg.com
The dollar may rise against the euro for a second day in Europe on traders' expectations reports this week on U.S. employment, consumer confidence and manufacturing will show economic growth is picking up.
The New York-based Conference Board's index of consumer sentiment rose to a 10-month high of 85 this month from 83.5 in June, a report today will probably show, based on the median estimate of 59 economists surveyed by Bloomberg News.
The U.S. currency was at $1.1514 per euro at 6:51 a.m. in London, from $1.1495 late yesterday in New York. It was also at 119.26 yen, from 119.43.
"The U.S. economy is improving and the dollar is going to strengthen as a result,'' said Koji Fukaya, chief foreign exchange analyst at Bank of Tokyo-Mitsubishi Ltd., the commercial banking unit of Japan's third-biggest bank. "Money flows to the U.S. are going to increase'' boosting the dollar to $1.10 per euro and 123 yen in the next three months, he said.
The dollar may fall against the yen after Japan's unemployment rate fell in June for the first time in four months and household spending had its biggest gain in almost two decades. Finance Minister Masajuro Shiokawa said the economy will exceed the 0.6 percent growth which the government projects for the current fiscal year ending March.
Japan Recovery?
Japan's jobless rate in June fell to 5.3 percent. Economists in a Bloomberg News survey expected the number to be unchanged from 5.4 percent in May. Another report showed spending by households headed by a salaried worker rose a seasonally adjusted 4.8 percent in June from May and 0.4 percent from a year earlier.
The reports helped stoke demand for stocks, with Japan's Nikkei 225 Stock Average climbing as much as 0.9 percent. Rising consumer spending may help Japan avoid its fourth recession in 12 years.
"Japan's economic numbers are improving and could boost stocks, causing some yen buying,'' said Minoru Shioiri, Tokyo- based senior manager of foreign exchange and Treasuries at Mitsubishi Securities Co., the brokerage unit of Japan's third- biggest bank. The dollar may fall to 119.20 yen today, he said.
The dollar's rise also may be limited by concern international investors will sell U.S. Treasuries as widening federal budget deficits necessitate increased debt sales. The government yesterday said it plans to borrow a record $230 billion this year to finance a budget deficit of more than $450 billion.
'Could Be Bad'
Purchases of Treasury securities by foreign investors helps offset the nation's current account deficit, which reached a record $503 billion last year. A country's current account is its broadest measure of trade.
U.S. 10-year notes fell for a fourth day in Asia, the longest run of declines since October, with the 3 5/8 percent note due in May 2013 down 7/32, or $2.19 per $1,000 face amount to 94 17/32. The yield rose 3 basis points to 4.31 percent.
"I would have thought yields would fall after getting to around 4.3 percent, but they haven't,'' Shioiri said. "That could be bad for the dollar.''
Other U.S. reports this week are expected to signal faster economic growth. Payrolls, which have shrunk every month since January, may have expanded by 10,000 in July, according to the median forecast of 66 economists surveyed by Bloomberg News, while the unemployment rate probably fell to 6.3 percent from June's nine-year high of 6.4 percent. Both reports will be released on Friday.
The University of Michigan's consumer sentiment index, also out on Friday, probably rose to 90.5 from 89.7, according to the median forecasts of 48 analysts surveyed.
An index of manufacturing in the Chicago area, slated for release Thursday, probably climbed to 53.8 from 52.5, while Friday's Institute for Supply Management's national manufacturing index probably rose to 52 from 49.8, economists said. For both indexes, readings over 50 signify expansion.
Speculative Positions
The evidence of a rebound in the world's largest economy may attract global capital to U.S. stocks, fueling demand for the dollar.
"I expect quite good figures,'' said Jason Sie, head of spot foreign exchange trading in Singapore at BNP Paribas, France's largest bank. "The equity market is holding up pretty well, and should favor the dollar.'' The U.S. currency may rise to $1.1350 per euro this week, Sie said.
The dollar may gain against the euro and yen in coming weeks, according to reports from the Commodity Futures Trading Commission for the week ended July 25.
The weekly IMM Commitment of Traders Reports, which detail the open interest in U.S. exchange-traded contracts, shows traders are reducing positions in the euro. Open positions are option or futures contracts that have not been closed, liquidated or delivered. The euro has declined 3.7 percent since reaching a record of $1.1933 on May 27.
In other trading, the euro held at 137.24 per euro. The dollar was at 1.3453 Swiss francs, from 1.3460. The British pound was at $1.6265, from $1.6252. |
