Dollar Fell Thursday Even as Investors Remained on Edge

May 26, 2011

On Thursday, the dollar lost 1.4% against the kiwi, 1.8% versus the Swissy, 0.8% against the yen and Aussie dollar, 0.7% relative to sterling, and 0.3% against the euro.  President Obama reportedly expressed concern about the risk of a weaker euro hurting U.S. exports.

Although Japan’s Nikkei advanced 1.5%, the German Dax lost 0.8%, and the Dow Jones Industrials closed less than 0.1% higher.

Ten-year U.S. Treasury and German bund yields fell by seven and five basis points.  The Treasury yield is barely above 3.0% and near a six-month low as QE2 enters the home stretch.  Deficit-mongers had predicted soaring long-term interest rates as the Fed accommodated deficit spending, but that hasn’t happened.

More weak U.S. data were reported.  GDP growth of 1.8% last quarter was not revised upward as hoped.  New jobless insurance claims climbed 10K last week to a discouraging 424K, and their four-week average was even higher at 438.5K.

The possibility of Greece not receiving further IMF/EU aid weighed on psychology, too.

Oil and gold prices recorded miniscule net movement.  But earlier talk of the commodity bubble bursting may be premature.  Oil prices have found repeated support in the mid- to high-$90 range, possibly setting the stage for an upward run at this spring’s highs.  Gold is above $1500 with room to spare.

German import prices went up 0.3% in April, less than half expectations and cutting their 12-month increase to 9.4% from 11.3%.

Japanese corporate service prices in April were 0.8% lower than a year earlier.

Italian business sentiment printed at 101.3 last month, less than in April and below forecasts.

French consumer confidence firmed to a reading of 84 in May from 83 in April.

South African producer price inflation of 6.% in April was below March’s 7.3% and less than projected.

The Swiss trade surplus widened 39% on month in April, and the franc hit another record high today against the euro.

Average weekly earnings in Canada rose 0.5% in March and were 4.1% higher than a year earlier.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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