North-West Financial Broker
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02 Feb - Fundamental
The dollar fell Tuesday as investors gravitated toward more risky currencies, but declines were limited ahead of key economic reports due out later in the week.
What prices are doing: The dollar was down 0.2% against the euro at $1.3962 and slid 0.1% versus the U.K. pound to $1.5975. It lost 0.3% against the Japanese yen at ¥90.39.
What's moving the market: The dollar came under pressure as stocks rallied for a second day on better-than-expected corporate results and signs of stability in the housing sector.
A Senate hearing on financial reform was also in focus, while several major automakers reported improved sales for January.
The greenback often weakens when stocks rally as investors seek higher yielding assets in more risky markets.
But the losses were relatively small as investors remain cautious ahead of the government's closely watched monthly jobs report, which is due on Friday. A report on the U.S. service sector is also on tap for later this week.
Earlier, the Australia dollar fell more than 1% against the U.S. dollar after the Australian central bank left rates unchanged at 3.75%. Analysts had expected a 0.25% increase.
The move raised concerns that the global economic recovery may not be as strong as previously expected and boosted demand for safe-haven assets. It was also seen as a response to steps Chinese policymakers have taken recently to roll back some economic stimulus efforts.
The euro found some support as concerns about Greece's debt woes were temporarily subdued. But analysts said the outlook for the Euro Zone economy remains cloudy.
What analysts are saying: «The greenback seems to be at least temporarily halting its current leg higher,» said Sacha Tihanyi, currency strategist at Scotia Capital. «The strong negative correlation between equities and the U.S. dollar has reestablished itself.»
The greenback had been steadily regaining ground in January as improved U.S. economic data raised optimism about the nation's gradual recovery. But the dollar remains vulnerable as investors appear to have regained their appetite for risk, Tihanyi said.
