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Dollar slips vs high yielders ahead of trade data Original Source Link: (May no longer be active)
http://www.forbes.com/markets/newswire/2004/02/13/rtr1259993.htmlhttp://www.forbes.com/markets/newswire/2004/02/13/rtr1259993.html
FOREX-Dollar slips vs high yielders ahead of trade data
Reuters, 02.13.04, 6:31 AM ET
(Updates price and quotes, changes byline)
By Mariko Hayashibara
LONDON, Feb 13 (Reuters) - The dollar fell to a 11-year low on sterling and held within a cent of a record low on the euro on Friday, pressed down by expectations U.S. interest rates will remain low in nervous trading ahead of U.S. trade data.
It hit seven-year lows on the Australian and New Zealand dollars as investors continued to dump the greenback in search of currencies with more attractive interest rates.
The U.S. dollar extended its broadbased decline this week after Federal Reserve Chairman Alan Greenspan indicated he was not concerned its fall was having an inflationary impact.
Investors have also been concerned about the extent of the U.S. trade deficit and data due at 1330 GMT is likely to show the deficit widened in December.
"(Trade data) will be the key highlight of the day. With a lot of event risks past...as the dollar still has its underlying structural problems, the trade deficit is going to be a good reminder of just how structurally weak the dollar is and why it needs to go lower," said Paul Mackel, FX strategist at ABN AMRO.
By 1120 GMT, the Aussie had touched a fresh seven-year high of US$0.7932 and the New Zealand dollar also traded at a new seven-year high of $0.7041.
Sterling also surged, hitting a new 11-year high of $1.8971 before trimming gains to $1.8925.
The dollar moved little against the euro and the yen, trading at $1.2823 per euro, less than a cent off January's record $1.2898 low, and at 105.33 yen, close to a three-year low set this week.
MORE US DATA, JAPAN
The U.S. trade deficit is forecast to widen to $40 billion from $38.01 billion in November as increasing domestic demand for imports outpaced the effects that the weaker dollar has had on growing exports.
Consumer sentiment data is also scheduled. The University of Michigan consumer sentiment index, due at 1445 GMT, is expected to have fallen slightly to 103.3 in February from 103.8 in January. U.S. import and export prices for January are due at 1330 GMT.
In the euro zone, a first estimate of the region's growth showed it expanded by 0.4 percent last year with fourth quarter growth just 0.3 percent on the previous quarter. The European Commission forecast growth would reach between 0.3 and 0.7 percent in the first and second quarters of 2004.
U.S. markets are on holiday for President's Day on Monday and some analysts said activity could be subdued as a result although others said the market might close some short dollar positions ahead of the weekend.
In Japan, officials kept up their usual warnings against rapid strengthening of the yen.
Finance Minister Sadakazu Tanigaki said the country's intervention in currency markets was not aimed at keeping the yen at a particular level but that it would take decisive steps against excessive moves.
Investors remain wary of the willingness and ability of Japan's financial authorities to intervene to prop up the dollar. In January alone, they spent a record seven trillion yen ($66.45 billion) on intervention.
"There must be some very keen defence of dollar/yen around 105.30," said Jake Moore, senior currency strategist at Barclays Bank in Tokyo.
"At the moment there is no coordinated intervention and it seems unlikely that there will be. Japan would love it, it would be very favourable for their policy. That said, people are getting nervous that the ECB could intervene in the months ahead. I personally don't think they will."
Copyright 2004, Reuters News Service
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