Reuters: US Dollar Report: FOREX-U.S. dollar trumps the rest, Aussie sags to 19-month low

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FOREX-U.S. dollar trumps the rest, Aussie sags to 19-month low May 29th 2013, 00:37 Tue May 28, 2013 8:37pm EDT * Dollar moves up across the board, yen weakens * Aussie breaks key support, slips further * Strong U.S. data stands out again weakness elsewhere- economist By Sophie Knight TOKYO, May 29 (Reuters) - The dollar gained broadly in early Asian trade on Wednesday after robust economic data boosted Treasury yields and raised expectations that the Fed may make an early exit from its easing scheme, making the greenback more attractive. The yen edged down 0.1 percent to 102.37 against the dollar after slipping 1.4 percent on Tuesday, after data showed U.S. consumer confidence reached a five-year high in May, while single-family home prices marked their biggest annual gain in seven years. Against a basket of currencies, the dollar rose 0.2 percent to 84.33 after tacking on 0.7 percent in the previous session. Demand for dollars rose as Treasury yields surged to their highest in a year and the Dow stock index hit another record high. "Expectations they will stop QE is a factor, but I think more than that it's about the fact U.S. growth outstrips that of Japan and Europe. Even if they didn't stop QE I think the general trend for dollar buying would continue," said Daisuke Karakama, market economist at Mizuho Corporate Bank. The dollar's strength piled pressure on the Australian dollar, which broke through key support to a 19-month low of $0.9581. The currency lost 0.4 percent, extending its tumble this month to 7.6 percent, after a surprise rate cut from the central bank also weighed on the currency. The Aussie broke key support at its 2012 low of $0.9581, signalling that its downtrend is likely to continue. "For the time being, a bearish AUD view is better expressed against the NZD (AUD/NZD completed a large top earlier this year) though a break below 0.9580 in AUD/USD would likely suggest that the USD is gaining a stronger bullish tone once again," Barclays analysts said in a note. On Wednesday, the Aussie lost 0.3 percent against the Kiwi dollar to 1.1875, approaching a 4-1/2 year low of 1.1848 hit on Monday. The euro laid low at $1.2850 after dropping 0.6 percent on Tuesday following comments from European Central Bank officials that the European Central Bank may cut interest rates into negative territory. ECB governing council member Christian Noyer said the central bank should be prepared to cut rates if necessary, while executive board member Peter Praet said the bank could do so if necessary, a day after another executive board member, Joerg Asmussen, said the loose policy would stay as long as required. A negative rate cut is expected by market participants to push the euro out of its now well-worn range of $1.28-1.32 it has carved out in the past few months. Link this Share this Digg this Email Reprints

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