Related News

WORLD FOREX: Dollar Dips Sharply, Fueled By Oil Above $60/Bbl

   By Dan Molinski 
   OF DOW JONES NEWSWIRES 
 

NEW YORK -(Dow Jones)- The dollar is down sharply Tuesday after crude oil prices popped above $60 a barrel, signaling a global rise in risk appetite that is causing investors to shop for foreign currencies that could offer meatier returns than that of the buck.

The dollar fell to a seven-week low against the euro Tuesday morning in New York, a four-month trough against the U.K. pound and a two-week low against the yen.

Data out Tuesday showing the U.S. trade deficit for March was smaller than economists were expecting did little to boost confidence in the greenback. Investors also seemed to ignore a strongly worded defense of the U.S. currency by Federal Reserve Chairman Ben Bernanke late Monday.

Analysts say that if the euro can move above $1.3739, an important high reached in March, then that may signal more rapid U.S. dollar weakness. It has reached as high as $1.3708 so far Tuesday.

"I would not expect it to bomb straight through (that key level) without good reason, like a sharp push higher in risk appetite," said Alan Ruskin, an analyst at the Royal Bank of Scotland.

Tuesday morning in New York, the euro had pared some of its gains and was at $1.3659 from $1.3582 late Monday. The dollar was at Y97.15 from Y97.41, according to EBS. The euro was at Y132.72 from Y132.31. The U.K. pound was at $1.5296 from $1.5120. The dollar was at CHF1.1049 from CHF1.1099 late Monday.

Following a prepared speech in Georgia Monday night, the Fed's Bernanke told the audience that the dollar will stay strong "because the U.S. economy is strong," and because "the Federal Reserve is committed to making sure we have price stability in this country."

But if the comments were meant to bolster the buck, they failed. Investors watched European stock markets rise overnight, saw oil prices moving up, and decided that the reasons to hold on to the greenback as a safe-haven were dissipating.

"Markets have appropriately shrugged (Bernanke's) comments off," said currency analysts at Scotia Capital.

The concern over the dollar is that the U.S. government's hyper-spending habits in recent months to save the banking industry will lead to higher inflation, reducing the dollar's value.

Meantime, the Canadian dollar is higher in the wake of twin Canadian and U.S. March merchandise trade reports released earlier. Canada's trade surplus unexpectedly widened to C$1.1 billion during the month, adding to a recent string of positive data surprises.

Combined with negative global momentum for the U.S. dollar after Monday's bout of correction, optimism about economic recovery flowing from the data is expected to restore the recent strengthening trend for the Canadian unit as well as other commodity-linked currencies.

Currency strategists at Scotia Capital in Toronto said that recent price action confirms that U.S. dollar "bears are still in control."

They suggest there is still a downside bias for the dollar against its Canadian counterpart, and look for the U.S. currency to retest downside support at C$1.1478.

Early Tuesday, the dollar was at C$1.1562 from C$1.1633 late Monday.

-By Dan Molinski, Dow Jones Newswires; 201 938-2245; dan.molinski@dowjones.com

(Paul Evans in Toronto contributed to this report.)

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=Uf07HjH2E3kguvqrobPF6w%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

May 12, 2009 09:21 ET (13:21 GMT)


Copyright 2009 Dow Jones & Company, Inc.

The Dow Jones content is the property of Dow Jones or its licensors, and is protected by copyright and other intellectual property laws. If you are an individual, you agree not to store, copy, reproduce, modify, distribute, transmit, display, perform, publish, transfer, create derivative works from, broadcast or circulate any Dow Jones content to anyone, including but not limited to others in the same company or organization, without the express prior written consent of Dow Jones. If you are an entity, you agree not to permit access to the Dow Jones content by anyone other than an employee of you.

Notwithstanding the foregoing, the Dow Jones content may be copied and sent without charge in the ordinary course of business provided all copyright and other proprietary rights notices, the original source attribution, and the phrase "Used with permission from Dow Jones & Company” are included. Dow Jones content may only be used in this way for a non-commercial purpose, meaning such copying:
(i) is made on either an infrequent or irregular basis to a limited number of individuals;
(ii) is incidental to the purpose of your principal business;
(iii) cannot be used as a substitute for any Dow Jones content or any substantial part of it;
(iv) has no independent commercial value;
(v) is not separately charged for; and
(vi) is not made in connection with commercial information broking, information vending, publishing or credit rating, nor for substantial reproduction through the press or media, nor for transmission via any private or public network, cable or satellite system.

You may not post any Dow Jones content to forums, newsgroups, mail lists, electronic bulletin boards, or other services, without the prior written consent of Dow Jones. To request consent for this and other matters, you may contact Dow Jones at djnewswires@dowjones.com .

The Dow Jones content is not intended for trading purposes. The Dow Jones content is not appropriate for the purposes of making a decision to carry out a transaction or trade. Nor does it provide any form of advice (investment, tax, legal) amounting to investment advice, or make any recommendations regarding particular financial instruments, investments or products. Dow Jones may discontinue or change the Dow Jones content at any time, without notice.

The Dow Jones content includes facts, views, opinions and recommendations of individuals and organizations deemed of interest. Dow Jones does not guarantee or warrant the accuracy, completeness or timeliness of, or otherwise endorse, these views, opinions and recommendations.

DOW JONES IS NOT RESPONSIBLE FOR ANY DELAY IN YOUR RECEIPT OF THE DOW JONES CONTENT RESULTING FROM THE INHERENT LIMITATIONS OF INTERNET TRANSMISSION VIA THE WORLD WIDE WEB. DUE TO THE NUMBER OF SOURCES FROM WHICH THE DOW JONES CONTENT IS OBTAINED, AND THE INHERENT HAZARDS OF ELECTRONIC DISTRIBUTION, THERE MAY BE DELAYS, OMISSIONS OR INACCURACIES IN THE DOW JONES CONTENT. THE DOW JONES CONTENT IS PROVIDED “AS IS”, WITHOUT ANY WARRANTIES. DOW JONES AND ITS AFFILIATES, AGENTS AND LICENSORS CANNOT AND DO NOT WARRANT THE ACCURACY, COMPLETENESS, CURRENTNESS, TIMELINESS, NONINFRINGEMENT, TITLE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE DOW JONES CONTENT, AND DOW JONES HEREBY DISCLAIMS ANY SUCH EXPRESS OR IMPLIED WARRANTIES. NEITHER DOW JONES NOR ANY OF ITS AFFILIATES, AGENTS OR LICENSORS SHALL BE LIABLE TO YOU OR ANYONE ELSE FOR ANY LOSS OR INJURY, OTHER THAN DEATH OR PERSONAL INJURY RESULTING DIRECTLY FROM USE OF THE DOW JONES CONTENT, CAUSED IN WHOLE OR PART BY ITS NEGLIGENCE OR CONTINGENCIES BEYOND ITS CONTROL IN PROCURING, COMPILING, INTERPRETING, REPORTING OR DELIVERING THE DOW JONES CONTENT. IN NO EVENT WILL DOW JONES, ITS AFFILIATES, AGENTS OR LICENSORS BE LIABLE TO YOU OR ANYONE ELSE FOR ANY DECISION MADE OR ACTION TAKEN BY YOU IN RELIANCE ON SUCH DOW JONES CONTENT. DOW JONES AND ITS AFFILIATES, AGENTS AND LICENSORS SHALL NOT BE LIABLE TO YOU OR ANYONE ELSE FOR ANY DAMAGES (INCLUDING, WITHOUT LIMITATION, CONSEQUENTIAL, SPECIAL, INCIDENTAL, INDIRECT, OR SIMILAR DAMAGES), OTHER THAN DIRECT DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL THE LIABILITY OF DOW JONES, ITS AFFILIATES, AGENTS AND LICENSORS ARISING OUT OF ANY CLAIM RELATED TO THIS AGREEMENT EXCEED THE AGGREGATE AMOUNT PAID BY YOU FOR THE DOW JONES CONTENT IN THE 12 MONTHS IMMEDIATELY PRECEDING THE EVENT GIVING RISE TO SUCH CLAIM. BECAUSE SOME STATES OR JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR LIMITATION OF LIABILITY FOR DAMAGES OR THE EXCLUSION OF CERTAIN TYPES OF WARRANTIES, PARTS OR ALL OF THE ABOVE LIMITATION MAY NOT APPLY TO YOU.

These Terms of Use, your rights and obligations, and all actions contemplated by these Terms of Use will be governed by the laws of England and Wales, and You and Dow Jones agree to submit to the exclusive jurisdiction of the English Courts.
If any provision in these Terms of Use is invalid or unenforceable under applicable law, the remaining provisions will continue in full force and effect, and the invalid or unenforceable provision will be deemed superseded by a valid, enforceable provision that most closely matches the intent of the original provision.