NVDA Q3 Earnings Alert: Why our AI stock picker is still holding Nvidia stockRead More

FOREX-Dollar supported as kiwi, Aussie fall on data

Published 02/03/2010, 10:34 PM
Updated 02/03/2010, 10:36 PM

* Dlr mostly steady to firmer, kiwi dives on NZ jobless jump

* Aussie slips after soft retail sales figures

* Euro wobbly as eurozone fiscal problems fester

* Focus on ECB and BOE meetings later in the day

By Masayuki Kitano

TOKYO, Feb 4 (Reuters) - The dollar was broadly steady on Thursday after blipping higher as the New Zealand dollar tumbled on a jump in unemployment and the Australian dollar slipped on data showing a dip in monthly retail sales.

The New Zealand dollar hit a five-month low of $0.6960 after data showed the country's jobless rate rising to a 10-year high, prompting markets to scale back expectations of an interest rate rise before mid-year.

The Australian dollar remained on a weak footing in the wake of the Reserve Bank of Australia's surprise decision this week to hold off from raising interest rates.

The Aussie dollar touched a six-week low of $0.8772 after figures showing Australia's retail sales fell more than expected in December, although that came after an upwardly revised jump in November.

The fall in the higher-yielding currencies helped lend broad support to the dollar, especially with the euro on shaky ground due to fresh fears that Portugal and Spain could join Greece as the next countries to face fiscal problems.

"Market players are now watching to see if the euro's fall will stop at $1.3850 or if it will keep heading toward $1.3700 or maybe even $1.3500," said a trader for a major Japanese bank.

The euro dipped as low as $1.3866, edging close to a seven-month low of $1.3851 hit on trading platform EBS earlier this week. Market players said there was talk of option triggers near $1.3850, and more below that at levels such as $1.3800, $1.3760 and $1.3750.

The euro later pared its losses and was steady compared to late U.S. trading on Wednesday at $1.3890.

The market focus now turns to the European Central Bank (ECB) rate decision later in the day. The ECB is widely expected to keep rates unchanged at its meeting on Thursday as financial woes in Greece, Portugal and Spain endanger the currency bloc's recovery.

News on Wednesday that Portugal's debt agency IGCP cut its T-bill placement to 300 million euros ($435.5 million) from a planned 500 million as yields spiked higher compared with January's placement put renewed focus on the euro zone's fiscal woes.

In addition, Spain on Wednesday raised forecasts for its fiscal deficit for the next three years.

DOLLAR INDEX

All that adds to the view that the United States will recover at a faster pace than the eurozone, a belief that is likely to see the dollar gain further ground.

The dollar index was steady at 79.393, after rising to 79.520 earlier. The dollar index faces resistance near its six-month high of 79.534 hit earlier in the week and then around 80.07, which is a 38.2 percent retracement of the fall from 89.624 to 74.17 in 2009.

The dollar dipped 0.1 percent against the yen to 90.87, ceding some ground after hitting a two-week high of 91.28 yen on Wednesday helped by better economic data out of the United States and higher U.S. yields.

U.S. data on Wednesday showed signs the job market was stabilising while the Institute for Supply Management's index of non-manufacturing companies rose to 50.5 from 49.8 in December..

All that bodes well for the nonfarm payrolls numbers due on Friday. A Reuters poll of top 20 forecasters estimated 8,000 jobs were added to the economy. That compares with a forecast of 5,000 jobs being added in a larger survey of 80 economists.

The Bank of England's monetary policy meeting will also be in focus on Thursday. The BOE is expected to halt its quantitative easing programme, although interest rates are seen likely to be held at 0.5 percent.

Sterling edged up 0.1 percent to $1.5912.

After trimming its earlier losses, the Australian dollar was 0.1 percent lower on the day at $0.8814. A fall to below $0.8735 would take the Aussie dollar to a four-month low.

The New Zealand dollar slid 0.5 percent to $0.6984. ($1=.6888 Euro) (Additional reporting by Anirban Nag in Sydney, and Charlotte Cooper and Satomi Noguchi in Tokyo; Editing by Michael Watson)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.