Friday, March 28, 2008

US Dollar News around the Web

Weekend roundup on US Dollar News


Dollar rebounds as U.S. economic growth meets expectations

The dollar rebounded slightly against most major currencies on Thursday as U.S. economic growth in the fourth quarter met market expectations.


Canadian dollar closed 0.29 of a cent lower at 97.90 cents US

The Canadian dollar closed at 97.90 cents US on Friday, down 0.29 of a cent. The U.S. dollar stood at 102.15 cents Cdn, up 0.31 of a cent.


US Dollar Consolidates Losses as Easing Price Pressures Boost Fed Rate Cut Expectations

Rising risk aversion paired with slowing inflationary pressures heightened US dollar volatility as it swayed throughout the trading session. Against the European currencies, the US dollar moved slightly lower against the euro as investors increased their bets of another rate cut by the Fed, while it accelerated against the British Pound as growth prospects look dim for the UK.


Dollar down on US GDP

It was in line with market expectations, which helped promote buying of the US dollar and resulted in the dollar drifting slightly lower from its close on the local session yesterday.


Currency falls on central bank warning

The New Taiwan dollar dropped nearly three-quarters of a percent against the greenback yesterday after the central bank showed its determination to prevent speculative attacks on the local currency, dealers said.


Is the Dollar Depressing Drug Companies?

In the past two weeks, the Federal Reserve cut the primary discount rate from 3.5% to 2.5%, on top of a large rate cut in January. In anticipation of and because of these rate cuts and a worsening economy, the U.S. dollar


Dollar Rises Against Major Currencies Friday

Even though the American economy has shown sluggishness in relationship to consumer spending, the U.S. dollar still managed to climb against the major currencies on Friday.

The Department of Commerce report noted that consumer spending, while growing, was only at a 0.1 percent rate in February. Not including food and energy prices, inflation was fairly tame, also rising by only 0.1 percent in February.

The U.S. dollar gained against the Euro, Canadian dollar and the Swiss franc, among others. It remained the same with the Japanese yen.

Thursday, March 27, 2008

Weakening U.S. Dollar has China Exporters Looking to Other Currencies

Chinese exporters are moving away from the American dollar as rising labor and material costs are cutting into their profits.

The Financial Times cited the CEO of B2B company Web firm, who said that the vast majority of the 700,000 Chinese suppliers are no longer using U.S. dollars to take care of non-U.S. transactions.

"They are moving to euros, pounds, Australian dollars or even quoting prices in renminbi (yuan)," CEO David Wei told the "Times."

Another drawback is when prices are quoted in U.S. dollars, they are now only valid for a seven day period, in contrast to the former 30-60 day periods.

So far in 2008, the yuan has climbed 3 percent against the dollar, but has declined against most other major currencies.

Dollar Returns to its Downward Trend

I don't think anybody really thought there was going to be a sustained rally with the U.S. dollar, as after a brief rally last week had some people almost euphoric and starting to talk as if something big was happening there. Most knew better.

Today the reality of the weakness of the dollar reasserted itself, as it continues its downward spiral.


For the third day in a row the yen increased against the dollar, as Japanese investors brought their money back home as concerns credit problems will spread across the world.

"Repatriation flows are likely to pick up and this will boost the yen," said Takuma Kurosawa, global markets treasurer in Tokyo at HSBC Bank, a unit of Europe's biggest lender. "Financial market turmoil increases Japanese investors' home bias. People are genuinely worried about the U.S. economy."

The yen rose to 98.72 a dollar, up from the 99.20 it was at late Tuesday in New York. Kurosawa added that the yen could trade as high as 95 a dollar next week.


Against the euru, the U.S. dollar fell to near a record low again, as more governments and investors believe the U.S. will have difficulty avoiding a recession. It traded at $1.5806, after the more significant 1.3 percent drop it experienced yesterday.


The Chinese yuan rose to its highest level against the U.S. dollar since it dropped the peg in 2005, reaching 7.01 yuan to one dollar. That's up from the 7.0252 of Wednesday.

With the Chinese seeking to strengthen their currency, it's believe by analysts it'll drop below 7 yuan a dollar in a very short time.

Tuesday, March 25, 2008

U.S. Dollar in Largest Drop against Euro in Two Weeks

Commodity prices have surged again as the U.S. dollar fell the most against the euro in two weeks.

Much of the economic news coming on the same day was a major instigator of the drop in value of the dollar.

Home prices in the U.S. dropped by 16 of 20 regions in the U.S. that were measured, while consumer confidence the country dropped to it lowest in March in five years. Future expectations were at a stunning lowest in 34 years.

"Even though the numbers were so bad, what we are seeing is part of the equity/dollar risk appetite play all of which is suggesting a comfort to take on risk at the expense of the U.S. dollar," said Ashraf Laidi, chief FX strategist at CMC Markets in New York.
Still, according to Laidi, when you consider all the bad news coming, the increase of the euro against the dollar wasn't as significant as it outwardly looks.

At its peak today, the euro increased to $1.5618; up 1.2 percent for the day.

The dollar also fell against the yen, with last results as 100.20 yen, a drop of 0.5 percent. The Swiss franc also increased against the greenback, with the dollar falling 1 percent to 1.0079 francs.

Falling U.S. Dollar Impetus behind 3 New Barclay ETNs

Saying investors continue to believe the U.S. dollar will continue falling, managing director for Barclay Global Investors, Philippe El-Asmar, said the company will be rolling out three new ETNs in the near future to take advantage of that expectation.

The three new exchange-traded notes will track currencies in emerging markets, the Middle East and Asia.

Investors have already bought in, as the combined notes have generated $150 million in investment, with a month left before the official launch, said El-Asmar.

The names of the new ETNs will be Global Emergin Markets Strategy, Asian and Gulf Revaluation and Intelligent Carry Index ETN.

The Asian and Gulf Revaluation ETN will track Asian and Middle Eastern currencies pegged to the U.S. dollar: Saudi Arabian riyal, the yuan, Hong Kong dollar, Singapore dollar and United Arab Emirates dirham.

With the high price of oil and assumed long term trend of a falling U.S. dollar, it is thought these countries may end up revaluing their respective currencies.

For the Global Emerging Markets Strategy ETN, they'll track 15 currencies through money markets in Latin America, Asia and Eastern Europe.

The Intelligent Carry Index is built to offer market-neutral returns, and will track the 10 most liguid currencies in the world.

Carry trade simply means an institution borrows in one countries with low interest rates and then invests the borrowed funds into countries offering higher interest rates.

The ETN is looked upon as a debt instrument by the Internal Revenue Service, and in a recent ruling in December the IRS determined that single currency ETNs will be taxed as debt.

What that means is they could be taxed at a 35 percent rate rather than the 15 percent enjoyed by long-term capital gains instruments. It taxes will apply even if there's no realized gain, i.e. even if you the notes aren't sold yet.

A ruling on tracking indexed or baskets of currencies hasn't been made yet, so at this time the taxation element in the investment isn't known.

If someone were to invest in these, they would have to take into account the possibility that the ETNS tracking more than a single currency may end up being taxed at the same rate. If that's so, someone could get stuck with high taxes while still holding the notes.

Saturday, March 22, 2008

Dollar Strengthens Against Euro, Yen for First Time in a Month

It's been a month since the U.S. dollar increased against the euro and yen for the week, as the Federal Reserve has battled to increase confidence in the economy and financial institutions in the country.

Along with cutting interest rates, the Fed also offered credit to securities firms, which was a first, as well as allowing a more extensive range of things they'll accept for collateral on loans.

Against the euro, the U.S. dollar increased to $1.5431, up from its March 14 price of $1.5674. It's been over a month since the dollar has reached that level. Against the yen, the dollar reached 99.58, a 1.5 percent increase from its March 14 finish also.

The dollar also gained against the pound, which fell to $1.9818; while it also increased against the Swiss franc, ending at 1.0093.

It also surged against the Norwegian kroner, buying 5.2616, and also with the Australian dollar, which plunged to a five-week low of 90.21 U.S. cents; falling by 3.8 percent.

For the week, the U.S. Dollar Index gained 1.5 percent to 72.71. On March 17 it had fallen to an all-time low of 70.698.

After the commodities fell this week, others believe there will also be drop in the commodity currency market also.

Thursday, March 20, 2008

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