MW; Dollar broadly lower as investors show more appetite for risk
Dollar broadly lower as investors show more appetite for risk
Broad-based selling greeted the dollar to kick off June, as investors piled into commodities and equities amid hopes the worst of the global recession will soon be over.
The dollar index stood at 78.622, down from near 79.30 in late North American trading on Friday.
Commodity-oriented currencies led Monday's charge higher against the U.S. currency.
The Australian dollar rose 1.4% on the day to trade at 81.20 U.S. cents, while the greenback fell 1.5% against the New Zealand dollar to NZ$1.5378 and gave up 1% against its Canadian counterpart to C$1.0804.
Appetite for riskier investments was on the rise "across the board," said Kenneth Broux, an economist at Lloyds TSB in London. "It certainly looks like there is a great acceleration in recent trends."
Rising risk appetite has translated into weakness for the dollar, which had gained ground previously on safe-haven flows as financial turmoil and economic fears deepened last fall.
The dollar index "steadily gave up all of its gains over the past week on a resumption of yield-seeking appetite and rising expectations that the pace of global economic downturn is easing," wrote analysts at Standard Chartered Bank.
They noted that technical measures, including the relative strength index and stochastic readings, indicate the index is heavily oversold, which could lead to choppy price action in the near term.
In energy trading, crude-oil futures rose above the $68 level a barrel earlier and remained $1.53 higher at $67.84 in recent action. And in metals, gold futures pressed nearer the $1,000-an-ounce mark, trading recently at $988.30 for a gain of $8, up nearly 1%.
In equities, the direction was higher as well. Asian stock markets rose and European markets remained solidly higher. See Asia Markets. Read Europe Markets.
U.S. stock index futures pointed to a higher opening, on the heels of Friday's late rally on Wall Street. Read Indications.
Some analysts also tied the dollar's weakness to General Motors and the automaker's impending bankruptcy filing. See full story.
Strategists at Brown Brothers Harriman said the Chapter 11 filing, which will leave the U.S. government owning a majority stake in the automaker, fanned worries about U.S. debt levels.
Broux played down the impact of the GM filing, however, saying markets had already factored in the widely expected move.
Monday's currency moves appeared to be taking place amid relatively light volume, he said, noting some European markets were closed for the Whit Monday holiday.
