Dollar Trades Near Lowest Since November; Greenspan Sees `Quasi Recession'
The dollar traded near its weakest since November against the yen on signs the U.S. recovery is losing momentum and after Former Federal Reserve Chairman Alan Greenspan said the slowdown feels like a “quasi recession.”
The Dollar Index was close to a three-month low before a report today that may show U.S. manufacturing growth slowed in July, adding to evidence the Fed will keep interest rates near zero. Australia’s dollar rose against 15 of its 16 most-traded counterparts as reports yesterday showed China’s manufacturing expanded for a 17th month and South Korea’s exports increased for a ninth month, boosting demand for higher-yielding assets.
“The U.S. economy is certainly losing some steam,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “We are seeing bond yields slide, dragging the U.S. dollar lower in tandem.”
The dollar traded at 86.49 yen at 9:07 a.m. in Tokyo from 86.47 yen in New York on July 30, when it reached 85.95 yen, the lowest level since Nov. 30. The U.S. currency was at $1.3056 per euro from $1.3052. Australia’s dollar rose 0.4 percent to 90.77 U.S. cents. The yen bought 112.92 per euro from 112.84 last week, when it touched 112.03, the strongest since July 23.
The yen fell against 15 of its 16 most-traded counterparts after Japanese Finance Minister Yoshihiko Noda said in Tokyo excessive currency movements are bad for the economy and he’s closely watching financial markets.
Dollar Index
The U.S. economy might contract again if home prices decline, Greenspan said in an interview on NBC’s “Meet the Press” yesterday. “We’re in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi- recession,” he said.
Fed Chairman Ben S. Bernanke will speak today on “Challenges for the Economy and State Governments” in Charleston, South Carolina.
The Dollar Index, which tracks the dollar against the currencies of six major U.S. trading partners including the euro and the yen, was at 81.54 from 81.539 on July 30, when it touched 81.459, the lowest level since April 27.
The Institute for Supply Management’s manufacturing index for the U.S. will show factories expanded in July at a slower pace for a third-straight month, according to economists surveyed by Bloomberg News before today’s report.
The U.S. economy grew at a 2.4 percent annual rate in the second quarter after a revised 3.7 percent increase in the first three months of the year, the Commerce Department said July 30. The forecast in a Bloomberg survey was for a 2.6 percent gain.
The dollar fell against all of its major counterparts in July, dropping 2.2 percent against the yen. It slid 6.2 percent versus the euro.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net
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