Dollar falls near 7-week low

The greenback weakens against rival currencies as investors seek higher returns in other markets.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)

Click the chart for current FX rates.
Who will benefit most from the Obama administration's proposed financial regulations?
  • Consumers
  • Banks
  • Regulators

LONDON (Reuters) -- The dollar slipped on Thursday, edging close to a seven-week low against the euro and a basket of currencies as slight gains in European shares suggested risk appetite was holding up after a mixed bag of corporate earnings.

European shares rose 0.2% in early trade, heading for a ninth straight daily rise, but analysts said significant risk-related gains in currencies including the euro and sterling may be limited by lingering concerns about the weakness of the global economy.

"Recent earnings data are helping risk appetite, but nevertheless, the upsides of risky currencies are capped as the market realizes that improvements in the global economy will be slow," said Ulrich Leuchtmann, currency strategist at Commerzbank in Frankfurt.

The euro inched up 0.3% to $1.4230, climbing near $1.4278 touched earlier in the week, its highest since early June.

The pair traded in a narrow $1.4200-1.4266 range, around where options were seen expiring later in the day. IFR reported that 200 million euros with a $1.4245 strike price would expire at the New York cut, along with 300 million euros at $1.4250.

Slight euro gains helped to keep the dollar index under downward pressure. It was little changed at 78.749, but hovered near a seven-week low of 78.563 hit the previous day.

High-risk currencies gain

Sterling and the Australian and New Zealand dollars -- currencies often seen as being higher risk -- each rose around 0.4% against the dollar, while gaining more than 1% against a broadly weaker yen.

The dollar rose 0.7% to 94.28 yen, as the yen fell broadly on speculation that investors may flock to "toshin" Japanese investment trusts launching this week which will invest in overseas assets and foreign currencies.

The Swedish crown rose to a three-week high versus the euro , brushing off a rise in the Swedish jobless rate to 9.8% in June as the data was lower than expectations and held below the psychologically vital 10%.

Investors awaited more second-quarter earnings from U.S. and European firms, including American Express (AXP, Fortune 500), as well as data on U.S. jobless claims and existing home sales.

Risk appetite has been improving due to strong quarterly results from some large banks including Goldman Sachs (GS, Fortune 500), although results from Morgan Stanley (MS, Fortune 500) on Wednesday were disappointing.

The intraday correlation between the dollar and equities at times has been erratic during the current earnings season, but analysts at JPMorgan (JPM, Fortune 500) said the general move lower in the dollar this month has been a solid response to "extraordinarily high" upside earnings surprises, which have stoked risk demand.

"The day-to-day price action may suggest some breakdown in the expected negative USD/equity correlation, but the dollar's decline this month has been in line with its usual sensitivity to earnings surprises," they said in a research note.

Markets offered little reaction to Federal Reserve Chairman Ben Bernanke, who on Wednesday reiterated that the U.S. economic outlook was improving but supportive policies would be necessary for a while. To top of page

Track 17 major currencies

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Copyright 2009 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.