Dollar falls to annual low against the Euro

2009-10-14 10:09

THE dollar fell to an annual low against the euro yesterday after a

dip in German investor confidence and disappointing earnings results failed to

undermine expectations of economic recovery.

Traders have been leaving the safety of the dollar in recent weeks

amid increasing hints of an economic turnaround.

Johnson & Johnson was the first among a number of key companies

to issue quarterly results this week. The health care products maker said sales

fell 5% in the third quarter, a steeper drop than analysts predicted.

Global investors are examining companies’ third-quarter earnings

announcements and forecasts for the months ahead for signs that the economy is

on a sounder footing.

After US aluminium maker Alcoa Inc. kicked earnings season off last

week with results that topped expectations, major banks such as JPMorgan Chase

& Co. and Citigroup Inc. will be releasing their reports this week, as will

Google Inc. and General Electric Co.

The 16-nation euro rose sharply to a daily high of $1.4876, its

highest level since August last year. In late New York trading it bought

$1.4829, up from $1.4776 two days ago.

The euro “is consolidating around $1.4800 and the next big level

will be a move up toward the psychological $1.5000 mark,” currency analyst David

Jones at IG Index wrote in a research note.

Meanwhile, the British pound jumped to $1.5901 from $1.5786 as

improvements in British retail sales and house prices were overshadowed by

warnings that business confidence remains frail and inflation dropped to a

five-year low.

The dollar slipped to 89.76 Japanese yen from 89.84 yen.

In Germany – Europe’s largest economy –the ZEW institute’s index,

which gauges investors’ outlook for the next six months, fell 1.7 points this

month to 56 points but remained well above its historical average of 26.7

points.

The survey found that while increases in industrial orders boosted

sentiment, recent data showing a decline in exports and doubts about the

strength of consumer spending weakened expectations. Investors nevertheless

continued to believe in a gradual recovery.

In other late trading two days ago, the dollar slipped to 1.0337

Canadian dollars from 1.0357 and edged down to 1.0230 Swiss francs from 1.0271

francs.


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