The U.S. dollar traded in a quiet range overnight against most of its major rivals even as global equities ticked lower and American futures foreshadow a weaker open for U.S. shares. The dollar continued to lose against the Swiss Franc as the currency continues to be the safe-haven of choice for investors. The Australian and New Zealand dollar fell against all of its counterparts as retreating stocks and lower commodity prices reduced demand for the two higher-yielding currencies. The U.S. dollar continues to remain under overall pressure on speculation Federal Reserve Chairman Ben S. Bernanke may signal additional steps this week that may debase the currency. However, if the Fed does not indicate further bond purchases at the conclusion of their summit in Wyoming this weekend, the U.S. dollar could see a modest rebound. Meanwhile, the economic docket showed orders for U.S. durable goods climbed more than forecast in July. Bookings for goods meant to last at least three years rose 4.0%, the most in four months, after failing a revised 1.3% in June, the Commerce Department reported today.
The Euro traded in sideways ranges versus the U.S. dollar as falling stocks and general dollar weakness over possible further U.S. monetary stimulus pulled the currency in opposite directions. The Euro fell against the Swiss Franc after German business confidence fell to the lowest level in more than a year as a global slowdown and Europe’s debt crisis dampened the outlook for economic growth. The Ifo Institute in Munich said its business climate index, a measure of German business confidence based on a survey of 7,000 executives, dropped to 108.7 in August from 112.9 in the prior month. The print marked the lowest reading since June 2010.
The Japanese yen rose towards postwar highs against the dollar as Finance Minister Yoshihiko Noda announced a $100 billion effort to help business cope with gains in the currency, reducing speculation Japan will intervene to curb gains. The government will release foreign-exchange reserves to the state-run Japan Bank for International Cooperation for funding to aid exporters to spur purchases overseas, Noda said. The announcement came hours after Moody’s Investors Service lowered the nation’s debt rating one step to Aa3, with a stable outlook
The British pound slid slightly overnight but remains near recent highs versus the U.S. dollar even as global equities decline. With little risk events on the docket in the U.K. this week, the direction of the pound and the dollar will likely take its cues from comments from the Fed on Friday at a conference in Wyoming. Last year, Chairman Bernanke’s speech at Jackson Hole marked a critical turning point as he first floated the idea of a second round of quantitative easing, sparking a sell off for the U.S. dollar.
