The U.S. dollar held in favorable ranges versus the majority of its counterparts despite rising European equities and U.S. stock futures showing the American shares will likely add to yesterday’s gains. The U.S. dollar fell late yesterday as stocks turned postivie after Federal Reserve Chairman Ben S. Bernanke signaled willingness to step measures to spur U.S. growth. Meanwhile, today’s economic docket showed that mortgage applications in the U.S. declined last week, weighed down by a drop in purchases and less refinancing. The Mortgage Bankers Association’s index fell 4.3%, the Washington-based group reported today. Also, companies in the U.S. added 91K jobs in September, according to ADP Employer Services. The increase followed a revised 89K gain in the prior month and beat forecasts for a 75K gain this month. The print may foreshadow a modestly stronger Non-farm payrolls number on Friday as the economy struggles to add jobs.
The Euro fell against most of its major rivals after Moody’s Investor Service cut Italy’s debt ranking and amid speculation a slowing economy will prompt the European Central Bank to expand stimulus at a meeting tomorrow. Moody’s cut Italy’s ratings three levels to A2 from Aa2, citing concern the government will struggle to reduce the region’s second-largest debt amid weak growth. Standard & Poors downgraded Italy last month for the first time in five years. Meanwhile, some traders have increased their bets that the ECB will lower borrowing cost tomorrow to fuel growth. Others expect the central bank to cut interest rates in the coming months. The economic docket showed that euro-area services and manufacturing output contracted more than estimated in September, a report showed today.
The British pound fell against the U.S. dollar after a government report showed U.K. economic growth slowed more than analysts forecast last quarter, adding pressure on the central bank to keep interest rates low. The sterling has been under pressure on speculation the Bank of England will boost its program of bond purchases as soon as its policy meeting tomorrow. Gross domestic product rose 0.1% from the first quarter, lower than the 0.2% previously published, the Office for National Statistics said today in London. Consumer spending plunged 0.8%, the most since the first quarter of 2009.
