Dollar Weakens on Speculation Auto Plan Will Boost Yield Demand

[Enivid]

The dollar fell against the euro, erasing a weekly gain, on speculation President Barack Obama will announce further assistance to the U.S. auto industry, reducing demand for the U.S. currency as a refuge.

Japan’s currency strengthened versus the greenback, paring its first quarterly loss since June, on prospects domestic companies are bringing home overseas earnings before the end of the financial year on March 31. The Australian and New Zealand dollars were poised for a fourth weekly gain versus the U.S. currency as stocks extended a worldwide rally to a third week and prices jumped for the commodities the two nations export.

“There are emerging expectations that the U.S. auto industry, which has been living on the edge, can avoid a hard- landing,” said Kengo Suzuki, a currency strategist in Tokyo at Shinko Securities Co. “This may further boost stock prices, improve risk-appetite and weaken the dollar.”

The dollar fell to $1.3587 versus the euro as of 6:01 a.m. in London from $1.3526 late yesterday in New York and $1.3580 on March 20. The greenback weakened to 98.27 yen from 98.71 yesterday. Japan’s currency traded at 133.55 per euro from 133.52. The dollar fell to $1.4493 per pound from $1.4453 yesterday and $1.4465 last week.

From Bloomberg News.

[Pinalli]

Originally Posted by Enivid

The dollar fell against the euro, erasing a weekly gain, on speculation President Barack Obama will announce further assistance to the U.S. auto industry, reducing demand for the U.S. currency as a refuge.

Japan’s currency strengthened versus the greenback, paring its first quarterly loss since June, on prospects domestic companies are bringing home overseas earnings before the end of the financial year on March 31. The Australian and New Zealand dollars were poised for a fourth weekly gain versus the U.S. currency as stocks extended a worldwide rally to a third week and prices jumped for the commodities the two nations export.

“There are emerging expectations that the U.S. auto industry, which has been living on the edge, can avoid a hard- landing,” said Kengo Suzuki, a currency strategist in Tokyo at Shinko Securities Co. “This may further boost stock prices, improve risk-appetite and weaken the dollar.”

The dollar fell to $1.3587 versus the euro as of 6:01 a.m. in London from $1.3526 late yesterday in New York and $1.3580 on March 20. The greenback weakened to 98.27 yen from 98.71 yesterday. Japan’s currency traded at 133.55 per euro from 133.52. The dollar fell to $1.4493 per pound from $1.4453 yesterday and $1.4465 last week.

From Bloomberg News.

The US Dollar pared gains and stabilized after a Japanese Finance Ministry and Russian Central Bank official both said that the US Dollar will remain the world’s reserve currency for some time to come. Fears were unleashed last week as the Chinese Finance Minister and a UN official both proposed a “global” reserve currency and US Treasury Secretary Timothy Geithner appeared to entertain the notion during a New York City conference. The Dollar fell 1.2% after Geithner’s gaffe, rebounding only after he was prompted to affirm the Dollars status as the primary reserve currency over an hour later.

On the close of forex online Friday, the Dollar fell .8% to the Yen to 97.87, rose nearly 1% to the Pound to 1.432 and the Canadian Dollar to 1.2417 and more than 1 ½% to the Swiss Franc to 1.1445. The dollar also fell more than 1% to the Australian Dollar to .6939, and just under 1% to the NZD to close out the week at .5697.

This week will see the leaders of the top 20 industrialized nations gather in London for the G20 (+EU) conference. Expect tepid trading until the conference begins and perhaps several volatile sessions as the leaders of the richest nations on earth try to come to some agreement on how to solve the economic crisis. The US and Great Britain, arguably the hardest hit so far, are lobbying for a 1.7 Trillion Dollar global stimulus package that is not favored by France and Germany to name a few. As the situation in England becomes worse and America’s debt grows, many leaders are questioning the affect of a severe increase in spending as it has so far done little to quell the crisis in countries that have employed this policy.