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The Dollar weakens against the Euro as U.S retail sales come out later today

Wed, Jan 14 2009, 10:09 GMT
by Benny Menashe

Finotec Group Inc.

The dollar declined against the euro on speculation reports this week will show U.S. retail sales and manufacturing weakened as a recession spread through the world’s largest economy. The dollar also fell for the first day in four versus the British pound after Federal Reserve Chairman Ben S. Bernanke said fiscal policy alone won’t lead to a lasting economic recovery, signaling the government may need to do more to stimulate growth. “Some traders are reducing their bets that the dollar will gain against the euro,” said Saburo Matsumoto, senior manager of foreign-exchange sales in Tokyo at Sumitomo Trust & Banking Co., Japan’s fifth-largest lender. “America leads the pack when it comes to bad economic news.” The EUR/USD is currently trading at $1.3325 as of 8:25am, GMT.

Job vacancies in London’s financial- services industry sank by two thirds in December compared with a year ago as a “serious lack of confidence” in the U.K. economy curbed hiring, according to a survey. The fall marked the sixth consecutive monthly decline for new job opportunities, the report said. The rate of decline is quickening, with falls of 34 percent, 42 percent, 48 percent and 59 percent from August to November, according to the Morgan McKinley. In other news U.K. real estate companies may need to be rescued by shareholders this year to stay afloat. The largest commercial property firms need to raise as much as $20 billion this year to restore their balance sheets at a time when financing is scarce, according to estimates by Bernd Stahli, an analyst at Merrill Lynch & Co. in London. The GBP/USD is currently trading at $1.4646 as of 8:50am, GMT.

The Australian dollar may fall against the British pound on an outlook for a deepening global slowdown, narrowing interest-rate advantage and rising foreign-exchange volatility, Commonwealth Bank of Australia said. Australia’s biggest bank forecasts the Australian dollar will weaken to 41.29 pence by the end of this quarter, wrote Richard Grace, chief currency strategist at Commonwealth Bank in Sydney, in a research note yesterday. The Reserve Bank of Australia cut the benchmark interest rate last year by three percentage points to a match a record low of 4.25 percent to revive its economy. The AUD/USD is currently trading at 0.6750 as of 9:15am, GMT.

Today's Economic Events

Published on  Wed, Jan 14 2009, 10:15 GMT