The dollar strengthened against most major currencies yesterday as European and US markets retreated ahead of the first-quarter reporting season, with the Dow Jones falling 155 points. Other significant news included the announcement that IBM Corp had decided not to go ahead with the planned takeover of Sun Microsystems Inc.
Data out in the eurozone which showed that retail sales had fallen also contributed to the weakening of the euro. The data showed that sales had fallen 4% from the year before, much more than analysts had predicted. Last week the ECB cut interest rates by 0.25%, less than the anticipated 0.5% and the G20 meeting concluded with the announcement that there will be $1 trillion provided in aid to revive the global economy. This resulted in an increase in investors’ risk appetite, thus diminishing the appeal of the dollar. However, the boost in the euro against the dollar seems to have been short-lived.
Gross Domestic Product figures are due from the eurozone today, while Consumer Credit and Consumer Confidence figures will be released in the US this afternoon.
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