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The dollar rose briefly after the release of narrower trade deficit during U.S. opening, the Commerce Department showed the figure declined to $64.3 billion from a record high of $69 billion in August (analysts’ forecast was $66 billion). The greenback surged against the yen and sterling to 118.60 and 1.8976 respectively, however, dollar reversed its gains as the University of Michigan's consumer sentiment survey came in lower than economists’ forecast. The headline index was 92.3, below market expectation of 93.7.
Comments from People's Bank of China (PBOC) Governor Zhou Xiaochuan that the central bank has a clear plan to diversify the country's foreign-exchange reserves pushed dollar further lower. As reported by China Central Television earlier, over 70 percent of China's foreign-currency reserves (worth over US$1 trillion) are in U.S. assets and any diversification will imply capital outflows from the U.S. dollar. Gold also jumped on the Zhou’s remarks and rallied to 635.50.
The dollar tumbled across the board after the news and slipped from 118.60 yen to below 118.00. Against the euro, the greenback rose to a 2-month high of 1.2849 before easing. Comments from Swiss National Bank board member Philipp Hildebrand about a possible rate hike supported the Swiss franc and usd/chf also fell to 1.2403.
The British pound declined after the Bank of England raised interest rates by 0.25 percent (as expected) with traders squaring long positions as BOE did not give any clues on future interest rates direction. The better U.S. trade data pushed cable lower to 1.8976 before price rebounded sharply in line with dollar's selloff after the comments from the PBOC’s chief. -------------------------------------------------------------
Updating time : 09/11/2006 22:35 GMT
The dollar falls on soft U. of Michigan survey and talk of China’s reserves diversification
The dollar rose briefly after the release of narrower trade deficit during U.S. opening, the Commerce Department showed the figure declined to $64.3 billion from a record high of $69 billion in August (analysts’ forecast was $66 billion). The greenback surged against the yen and sterling to 118.60 and 1.8976 respectively, however, dollar reversed its gains as the University of Michigan's consumer sentiment survey came in lower than economists’ forecast. The headline index was 92.3, below market expectation of 93.7.
Comments from People's Bank of China (PBOC) Governor Zhou Xiaochuan that the central bank has a clear plan to diversify the country's foreign-exchange reserves pushed dollar further lower. As reported by China Central Television earlier, over 70 percent of China's foreign-currency reserves (worth over US$1 trillion) are in U.S. assets and any diversification will imply capital outflows from the U.S. dollar. Gold also jumped on the Zhou’s remarks and rallied to 635.50.
The dollar tumbled across the board after the news and slipped from 118.60 yen to below 118.00. Against the euro, the greenback rose to a 2-month high of 1.2849 before easing. Comments from Swiss National Bank board member Philipp Hildebrand about a possible rate hike supported the Swiss franc and usd/chf also fell to 1.2403.
The British pound declined after the Bank of England raised interest rates by 0.25 percent (as expected) with traders squaring long positions as BOE did not give any clues on future interest rates direction. The better U.S. trade data pushed cable lower to 1.8976 before price rebounded sharply in line with dollar's selloff after the comments from the PBOC’s chief. -------------------------------------------------------------
