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The dollar gained broadly Wednesday
Written by article default Wednesday, 16 June 2010 06:36
Market OverviewThe dollar gained broadly Wednesday after a fresh wave of concern over euro-zone sovereign debt, along with disappointing U.S. data, led investors away from the euro and other riskier currencies.
The euro fell against the dollar and its other rivals on earlier reports Spain would request aid from the European Union or International Monetary Fund, something Spain denied and an EU official declared rubbish.
U.S. data, including a home-construction figure that plunged in May, added to the negative tone in markets, also strengthening the Japanese yen as investors sought safety in the traditional haven, while leading to further losses in currencies closely tied to global growth, including the Australian dollar, which lost nearly 0.7% against the greenback.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 86.302 from 85.934.
Data Wednesday showed U.S. home construction sinking in May, setting back the housing sector as builders remain cautious about sales prospects absent government support programs.
Housing starts dropped 10% the month after the government ended its homebuyer tax credit program, to a seasonally adjusted annual rate of 593,000. Permits for new construction also declined, the Commerce Department said Wednesday. Single-family housing starts slid by 17.2% to an annual rate of 468,000, the lowest level in a year.
Market expectation
Even with the rumors of Spain seeking aid swirling around markets, the common currency has remained fairly resilient, said analysts. As long as the euro holds above USD1.2220 or, more ideally USD1.2250 its short-term recovery would appear to remain intact.
Some about EURUSD say that upside the initial target stands at USD1.2366 and break here to open key USD1.2451, 28 May high. Loss of USD1.2162 sidelines near-term bulls.