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Dollar holds ground against euro
October 29, 2009
New York - The US dollar rose on Wednesday for the fourth straight session against the euro as investors sought safety in the greenback after depressing economic data raised concerns about economic recovery.
The euro fell to 1.4714 dollars at 2200 GMT from 1.4810 dollars late Tuesday in New York.
The dollar fell to 90.63 yen from 91.77 yen a day earlier.
Investors were spooked by fresh US government data Wednesday showing an unexpected decline in new home sales after a key consumer confidence index posted a surprise drop a day earlier.
The bearish data sent Wall Street shares to their worst losses this month while oil prices also slumped on rising crude and gasoline stockpiles in the United States in an indication of falling demand.
"The euro continues to lose ground after failing to hold above 1.5000 as a sharp pullback in risk appetite and concerns over global growth weigh on the single currency," said analyst John Rivera of Forex Capital Markets.
Kathy Lien, director of currency research at Global Forex Trading, said "risk tolerance was obliterated on weak" US new home sales and a continued selloff on Wall Street.
"The report on new home sales accelerated the pace of this week's decline in currencies like the euro," she said.
The dollar is regarded as a safe-haven currency and usually in demand on negative economic perceptions.
The US Commerce Department said Monday that sales of new single-family homes dropped at a seasonally adjusted annual rate of 402,000 or by 3.6 percent last month from a revised 417,000 in August.
That was far below market forecasts of a level of 440,000 in September as analysts had expected sales to post their sixth consecutive monthly gain with builders benefiting from a federal tax credit for first-time homebuyers that expires at the end of next month.
Fresh data Wednesday showing new orders for US manufactured durable goods rising 1.0 percent in September hardly impacted the market, analysts said.
The new housing and durable goods numbers came ahead of the release on Thursday of the government's first estimate of third-quarter gross domestic product, or the output of goods and services in the world's largest economy.
Most analysts expect that GDP expanded 3.2 percent, the first growth for the United States after a year of quarterly contractions.
Some economists have slashed their GDP estimates following the bearish data Wednesday.
"A US number below 2.7 percent would raise concerns the global economy is recovering at a slower than expected pace and could trigger a further reduction in risk-on trades," said Brown Brothers Harriman & Co.
In late New York currency trading, the pound rose to 1.6383 dollars from 1.6380 dollars a day earlier.
The dollar rose to 1.0260 Swiss francs from 1.0210 Swiss francs. - AFP
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