The Dollar sellers took a breather today in Asia. The battered buck hovered near late NY levels after poor US data and equities sent it safely away from recent record lows. Despite solid earnings on Wall Street, poor housing starts and PPI data quashed any chance of positive gains in equities, and as stocks fell, the dollar pulled back from the abyss. The EUR/USD that spent the day flirting with 1.5000 was suddenly a big figure lower. The pair opened in Asia nearer to 1.4945, and after a quick dip to 1.4890, was just shy of opening levels by the session's close.
The currencies down under were given a quick boost as the Reserve Bank of New Zealand's Bollard was quoted on a radio program as stating that the high levels in the Kiwi were ''not necessarily an obstacle to raising the cash rate''. The NZD/USD shot 50 pips higher to 0.7520 highs on the news, pulling the AUD/USD to 0.9250 highs as well. Both currencies settled down when it seemed that the comments were taken out of context.
Comments from the Bank of England's King stating that the UK needs to take higher rates into account while planning their finances pushed the Pound higher in Asia. GBP/USD climbed from 1.6350 to near 1.6435 over the course of the day on the news.
Profit taking also played a part in the dollars stability today as Brazil issued a new 2% tax on foreign investments sending many investors scrambling to square up positions. The tax was a government sanctioned move to slow the recent gains in the Brazilian Real.
With stocks lower across Asia, risk aversion was a player in the mix as well. The yen made gains on the crosses and USD/JPY drooped to 90.60 levels heading into London. With FED members continuing the rhetoric of continued low rates, tomorrow could bring more hits to the dollar with FOMC members Lacker and Tarullo both speaking at lunch time in New York.
