US dollar gains despite falls in US confidence, home prices
28 May 2008
No CommentUS dollar gains despite falls in US confidence, home prices
Posted: 28 May 2008 0622 hrs
NEW YORK: The US dollar gained against the euro and other major currencies on Tuesday, lifted by lower oil prices as the market shrugged off a weak reading on US consumer confidence and falling home prices.
The single European currency was at 1.5686 dollars around 2100 GMT, down from 1.5770 dollars late Monday.
The dollar rose to 104.24 yen, up from 103.44 on Monday.
Oil fell more than three dollars in New York and four dollars in London at the markets’ close, signalling fresh evidence of a weakening US economy that raised doubts about the outlook for demand in the world’s biggest energy consumer.
US consumer confidence fell to a 16-year low in May in a stuttering economy and as surging oil prices pushed inflation expectations to an all-time high, The Conference Board reported on Tuesday.
The business research firm said its index of consumer confidence, which has slid all year, fell to 57.2 from 62.8 in April. Most analysts expected a reading of 61.
“Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers’ confidence in the overall state of the economy,” said Lynn Franco, director of The Conference Board consumer research centre.
Added Paul Ashworth of Capital Economics: “The arrival of the first batch of tax rebates hasn’t improved the mood of consumers one bit. Instead their mood has become even blacker.”
Another closely watched US indicator, the Standard & Poor’s Case-Shiller index of national home prices, fell a record 14.1 percent in the first quarter compared with a year ago, the fastest plunge since it was first reported in 1988.
Slightly more positive news came from the US Commerce Department, which reported that sales of new homes rose an unexpected 3.3 percent in April when most analysts had predicted a decline.
March sales, however, were revised lower to 509,000 properties compared with an initial tally of 526,000, according to the Commerce Department survey.
The euro suffered from data showing sagging confidence in France and Germany.
Germany’s GfK consumer confidence indicator fell to 4.9 points in June compared with 5.6 points in May and against analyst forecasts for an improvement to 5.8.
In France, the INSEE business confidence dropped four points to 102 in May, beyond estimates for a more modest fall to 104.
The pound was weaker across the board after the country’s main business lobby warned that the services sector was suffering, with profitability declining sharply.
The Confederation of British Industry’s quarterly survey of the sector showed that levels of business volumes and values remained weak, and neither consumer nor business services firms were positive about expansion over the coming year.
But the pound’s losses were limited by the widespread market view that the Bank of England is in no rush to cut interest rates because of a threat of inflation.
In late New York trading, the dollar stood at 1.0337 Swiss francs, up from 1.0245 on Monday.
The pound was at 1.9763 dollars, down from 1.9817. – AFP/de
Singapore Property – Buy, Sell, Rent and Invest
Jerry Hansin (+65)9027 5537
email: jerry@assetomgt.com
website: www.assetomgt.com
Have your say!
You must be logged in to post a comment.