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Market Review - 23/09/2008 22:09 GMT
U.S. dollar rises against euro on easing concerns on bailout plan and drop in oil prices
The U.S. dollar rose against the euro on Tuesday after a sharp fall in the previous session, buoyed by lower oil prices and views that the government's bailout plan might not be as negative for the currency as some had feared.
U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke testified before the Senate Banking Committee on Tuesday, with Paulson urging Congress to act swiftly to put in place a $700 billion financial system bailout and warning that delays would put the economy at risk. Under the plan, the government would buy devalued securities from financial institutions and economists estimate this would drive government debt above 70 percent of gross domestic product and the annual budget gap to an all-time high next year.
The euro started to decline yesterday after a report showed Europe's manufacturing and service industries contracted at the fastest pace in nearly seven years this month (manufacturing PMI was 45.3 in September versus 47.6 in the previous month) and in late New York trading session, a drop in oil prices also weigh on the single currency, falling to as low as 1.4623 against the dollar before staging a recovery while November crude futures fell 2.35 percent to settle at $106.96 a barrel amid concerns about demand and a slowing economy. Against a basket of major currencies, the dollar index rose 0.4 percent to 76.561
However, the dollar fell 0.1 percent to 105.20 versus the Japanese yen due to some unwinding in carry trades on risk aversion as U.S. stock markets turned from positive to negative on the day. The Dow Jones Industrial Average Index dropped 161 points or 1.47 percent and closed at 10,854. The euro also fell against the yen to 154.49 in late U.S. session.
In other currencies, Colombia's peso led a decline in Latin American currencies against the dollar yesterday on concern delayed approval of the U.S. financial industry bailout may curb demand for higher-yielding, emerging-market assets. The peso dropped 3.1 percent to 2,106.5 against the dollar, the biggest decrease since June. The Brazilian real depreciated 1.3 percent to 1.8275 versus the dollar.
On Wednesday, economic data releases include German Ifo business index, eurozne current account, U.K. CBI distribution trades, and U.S. existing home sales. At 14:00GMT, Federal Reserve Chairman Ben Bernanke will testify on the U.S. economic outlook before the congressional Joint Economic Committee, and later in the day at 18:30GMT, he will testify together with U.S. Treasury Secretary Henry Paulson on Bush administration’s capital markets intervention proposal before the House Financial Services Committee.
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Market Review - 23/09/2008 22:09 GMT
U.S. dollar rises against euro on easing concerns on bailout plan and drop in oil prices
The U.S. dollar rose against the euro on Tuesday after a sharp fall in the previous session, buoyed by lower oil prices and views that the government's bailout plan might not be as negative for the currency as some had feared.
U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke testified before the Senate Banking Committee on Tuesday, with Paulson urging Congress to act swiftly to put in place a $700 billion financial system bailout and warning that delays would put the economy at risk. Under the plan, the government would buy devalued securities from financial institutions and economists estimate this would drive government debt above 70 percent of gross domestic product and the annual budget gap to an all-time high next year.
The euro started to decline yesterday after a report showed Europe's manufacturing and service industries contracted at the fastest pace in nearly seven years this month (manufacturing PMI was 45.3 in September versus 47.6 in the previous month) and in late New York trading session, a drop in oil prices also weigh on the single currency, falling to as low as 1.4623 against the dollar before staging a recovery while November crude futures fell 2.35 percent to settle at $106.96 a barrel amid concerns about demand and a slowing economy. Against a basket of major currencies, the dollar index rose 0.4 percent to 76.561
However, the dollar fell 0.1 percent to 105.20 versus the Japanese yen due to some unwinding in carry trades on risk aversion as U.S. stock markets turned from positive to negative on the day. The Dow Jones Industrial Average Index dropped 161 points or 1.47 percent and closed at 10,854. The euro also fell against the yen to 154.49 in late U.S. session.
In other currencies, Colombia's peso led a decline in Latin American currencies against the dollar yesterday on concern delayed approval of the U.S. financial industry bailout may curb demand for higher-yielding, emerging-market assets. The peso dropped 3.1 percent to 2,106.5 against the dollar, the biggest decrease since June. The Brazilian real depreciated 1.3 percent to 1.8275 versus the dollar.
On Wednesday, economic data releases include German Ifo business index, eurozne current account, U.K. CBI distribution trades, and U.S. existing home sales. At 14:00GMT, Federal Reserve Chairman Ben Bernanke will testify on the U.S. economic outlook before the congressional Joint Economic Committee, and later in the day at 18:30GMT, he will testify together with U.S. Treasury Secretary Henry Paulson on Bush administration’s capital markets intervention proposal before the House Financial Services Committee.
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