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Dollar in decline as consumer confidence expected to come in low

Fri, Jul 11 2008, 11:50 GMT
by Benny Menashe

Finotec Group Inc.

The dollar headed for a weekly loss against the euro on speculation a report today will show U.S. consumer confidence fell to a 28-year low, signaling the Federal Reserve will refrain from raising interest rates this year. The currency traded near a 25-year low versus the Australian dollar after Treasury Secretary Henry Paulson told lawmakers financial markets will take ``additional time'' to stabilize. The dollar pared its decline after the New York Times reported U.S. officials are considering plans to take over one or both of Fannie Mae and Freddie Mac, the two largest buyers of U.S. home loans. ``The dollar is vulnerable,'' said Toru Umemoto, chief currency strategist in Tokyo at Barclays Capital Inc., a unit of the U.K.'s third-biggest bank. ``The markets cannot dispel concerns over the U.S. financial sector and its negative impact on the economy.'' EUR/USD currently trading at $1.5779 as of 7:52 am, GMT.

The U.S. trade deficit widened in May as record oil prices pushed up the value of imports faster than American companies expanded their exports, economists said before reports today. Rising prices for oil, metals and other imported commodities are boosting the trade deficit. Still, the dollar's six-year slide, coupled with stronger growth in Asia, Latin America and the Middle East, is spurring demand for equipment made by companies such as Caterpillar Inc., helping to keep the economy from contracting. In response to growing demand from China, Caterpillar, the world's biggest maker of earthmoving equipment, will build a factory in eastern China to make light hydraulic excavators for the world's largest earthmover market after the U.S. ``Our customers in China are demanding a greater variety of construction equipment,'' Mary Bell, Caterpillar's global vice president for construction machines, said in a statement June 30.

U.K. banking officials will meet today with the Bank of England to seek broader terms for a liquidity funding plan that was started in April, the Daily Telegraph reported, citing people familiar with the matter. The bankers will say that the Special Liquidity Scheme hasn't brought down Libor, the lending rate between banks, or mortgage rates, the newspaper said. GBP USD currently trading at 1.9760 as of 8:09 am, GMT.

Today's Economic Events

Published on  Fri, Jul 11 2008, 12:03 GMT