Thursday, Jul 23, 2009
By Riva Froymovich
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)-- The dollar fell to a fresh seven-week low against the euro and Canadian unit Thursday morning, as riskier trades gained momentum and stocks rallied.
Higher-yielding and riskier currencies are in favor after positive U.S. data releases Thursday and continued signs of economic recovery in second quarter earnings reports spurred risk appetite. That has lead that the safe-haven greenback and yen to sell off.
The euro hit a three-week high against the yen, which fell to a two-and-a-half week low against the dollar as well.
The U.K. pound advanced to more than a three-week high against the dollar.
Adam Boyton, currency strategist at Deutsche Bank in New York, said riskier currencies are approaching their highs for the year.
"If they do make new highs, that could give this rally a few more legs," he said.
However, at least in the case of the high-flying Australian dollar, which recently gained to a fresh 6-week high Thursday morning, such stark gains should be seen as selling opportunities, said Boyton.
Thursday morning in New York, the euro was at $1.4284 from $1.4211 late Wednesday, and the dollar was at Y94.81 from Y93.54, according to EBS. The euro was at Y135.46 from Y132.96. The U.K. pound was at $1.6582 from $1.6463, and the dollar was at CHF1.0644 from CHF1.0662.
Data in the U.S. included better-than-expected weekly U.S. jobless claims data and June home resales.
The Canadian dollar found additional support from the latest Bank of Canada Monetary Policy Report.
The dollar fell as low as C$1.0863, its lowest level since June 3.
Canada's central bank predicted the economy would recover this quarter after three consecutive declines, three months sooner than previously anticipated, and said financial conditions have improved.
Although the bank did say the strong Canadian dollar could be a "significant" drag on growth and put added downward pressure on inflation, this wasn't considered a strong enough statement by traders to warrant fears that the BOC could intervene to weaken the Canadian unit. As a result, the currency advanced higher.
Thursday morning in New York, the dollar was recently at C$1.0853 from C$1.1005 late Wednesday.
The yen is also under broad pressure on talk of higher demand in Japan of foreign-denominated investment trusts.
"Demand out of Japan for the large Toshin issues ($30 billion estimated to have been issued this week and denominated in a number of currencies including the Australian, South African and Brazilian real) may have contributed to the weaker yen," said analysts at Brown Brothers Harriman. "The South African rand and the Australian dollar are amongst the top performers [Thursday] against the yen."
-By Riva Froymovich, Dow Jones Newswires; 212-416-2217; riva.froymovich@dowjones.com
(END) Dow Jones Newswires
July 23, 2009 11:41 ET (15:41 GMT)
