NEW YORK (CNN/Money) - The dollar reached a new low against the euro on Wednesday as a batch of U.S. economic data failed to ease the heavy selling pressure that pushed the U.S. currency to fresh lows.
In mid-afternoon trading, the euro bought $1.3176, a new record. The European currency traded at $1.3082 late Tuesday. Against the yen, the dollar bought ¥102.85, down from ¥103.35 late Tuesday, within sight of Friday's four-year low of around ¥102.70.
Against a backdrop of concern over the bulging external U.S. deficit, the lack of will among U.S. policymakers to halt the dollar's slide and speculation some central banks are increasing their euro holdings, the dollar hit new lows against many major counterparts.
A somewhat mixed bag of U.S. data, particularly the below-consensus University of Michigan consumer sentiment number, failed to give the dollar any respite.
"This is not an environment where cyclical data matters all that much," Bob Sinche, head of global currency strategy at Bank of America in New York, told Reuters.
"But this isn't about cyclical performance. It's about reserve re-allocation and sluggish capital flows going into the year-end. And it seems like nobody wants to stand in the way at the moment."
The University of Michigan's final reading of its consumer confidence index for November was 92.8, up from a final October reading of 91.7. But analysts on average had forecast the index would rise to 96.0. The November preliminary reading came in at 95.5.
In the bond market, the benchmark 10-year note lost 4/32 of a point to 100-12/32 to yield 4.20 percent, up slightly from 4.19 late Tuesday. The 30-year bond fell 3/32 of a point to 107-25/32 to yield 4.85 percent, up from 4.84 on the session. Bond prices and yields move in opposite directions.
The two-year note shed 2/32 of a point at 99-22/32 to yield 3.03 percent, and the five-year note lost 4/32 at 99-16/32, yielding 3.61 percent.
The two-year yields broke above 3 percent for the first time since July 2002 as a drop in jobless claims and strong housing data bolstered expectations of higher official interest rates.
"We look for a hike at every meeting next year," Ram Bhagavatula, chief economist at RBS Financial Markets, told Reuters. That would bring rates to 4.25 percent by end-2005, a lot higher than the market has currently priced in.
Bonds dipped when initial jobless claims data showed a drop to 323,000 last week from 335,000 the previous week, suggesting some improvement in the labor market.
The losses were trimmed when a separate report showed orders for durable goods fell 0.4 percent in October, compared with forecasts of a 0.5 percent gain. However, that picture was balanced by sizable upward revisions to orders for September, which meant the report was not nearly as soft as it seemed.
Analysts noted in particular that shipments of non-defense capital goods excluding aircraft, a proxy for current investment spending, rose a hefty 3.1 percent in October, while September was revised higher.
Housing investment also looked set to contribute to growth this quarter. Figures on new home sales for October showed annual sales running at a rate of 1.226 million, up from 1.224 million in September and well above forecasts of 1.20 million.
Trading in the bond market was subdued with abbreviated trading hours before the Thanksgiving holiday. The market closed at 2 p.m. ET. It will be closed on Thursday.
-- from staff and wire reports
|
