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About GAIN: News & Events |
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Renewed Warning by Greenspan Keeps Dollar Under Pressure
NEW YORK (AFP) - The dollar came under fresh pressure as traders brushed off an upbeat US labor market report and reacted to a renewed warning by Federal Reserve Chairman Alan Greenspan on US deficits.
The euro rose to 1.3069 dollars at 2200 GMT from 1.3030 late on Wednesday in New York. The dollar managed a modest rise to 105.51 yen from 105.32 on Wednesday.
Early dollar gains evaporated in late morning as Greenspan made a new warning on US dependence on foreign investment to House of Representatives Financial Services Committee members.
"The market was clearly disappointed by Greenspan," said Neil Mellor, currency analyst at the Bank of New York.
"The latest weak point for the dollar came when Greenspan repeated that foreign deficit financing will not last indefinitely," Gain Capital's Brian Dolan said.
The market digested mixed economic news. US jobless claims dropped to a four-year low, but the Conference Board's index of leading economic indicators showed a 0.3 percent drop in January.
A better-than-expected reading for the Philadelphia Fed index of manufacturing activity, meanwhile, failed to boost the US currency.
The index rose to 23.9 from 13.2 in January, well above the consensus for a rise to about 16.9.
Elsewhere, the yen remained weak with sentiment still dampened by output data on Wednesday that showed Japan had entered a recession during 2004.
"Sentiment has deteriorated a bit after the report. Any confirmation of a recession will send a shudder through the market," Mellor said.
In late New York trade, the dollar stood at 1.1838 Swiss francs from 1.1867. The pound was at 1.8953 dollars, unchanged from Wednesday.
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Overview