MW: Euro slides as outlook for global growth feeds dollar buying
Pound extends gains; Aussie dollar relinquishes advance after new PM steps in
By MarketWatch
PORT LOUIS, Mauritius (MarketWatch) -- The euro fell Thursday, as another round of hand-wringing about the global economy -- this time set off by a recent run of weak U.S. housing data -- prompted investors to buy the dollar as a safe haven.
The dollar index (DXY 85.82, +0.08, +0.09%) , which tracks the U.S. unit against six major counterparts, rose to 85.86 from 85.82.
"There's a bit of concern about the health of the global economy, and it stems from housing data," said Neil Mellor, currency strategist with BNY Mellon in London.
"Add to that the ongoing crisis in the euro zone," he said. With economic headwinds in focus, "the U.S. dollar tends to outperform."
On Wednesday, the Commerce Department said sales of new homes plunged 33% in May to a record low as a tax credit expired. The report followed by a day data showing a surprise drop in U.S. home resales. See Economic Report for more on homes sales.
The euro (CUR_EURUSD 1.2293, -0.0027, -0.2192%) fell to $1.2285 from $1.2312 late in Wednesday's session, and also slid against the Japanese yen.
The British pound, however, sidestepped global growth concerns. The British currency extended this week's gains, which have been supported by the new coalition government's announcement Tuesday of an emergency budget that it would cut spending and rein in the U.K. deficit.
The pound (CUR_GBPUSD 1.4988, +0.0032, +0.2140%) rose as high as $1.5011, the first time it's topped $1.50 on an intraday basis since May 12, and recently traded at nearly $1.50 compared with $1.495 late in the prior session.
On Wednesday, minutes from the Bank of England's latest interest-rate meeting showed one member wanted to raise rates. Also, Moody's Investors Service said that the U.K. budget is supportive of the country's Aaa rating and a stable outlook. Read about Moody's assessment of U.K. budget.
Aussie's short-lived rise
In Asia trading, the Australian dollar relinquished earlier gains after Julia Gillard, the new prime minister, raised hopes that a controversial mining-tax proposal will be modified. See full story on Gillard replacing Kevin Rudd in Australia's top post.
Gillard called for a truce between the government and the mining industry regarding the planned levy, which would impose a 40% tax on miners' profits, beginning on July 1, 2012.
The Aussie (CUR_AUDUSD 0.8689, -0.0050, -0.5720%) was buying 87.39 U.S. cents Thursday, down 0.2%, after having risen as high as 87.68 U.S. cents earlier.
Against the Japanese yen, the dollar (CUR_USDYEN) fell to ¥89.54 from ¥89.87.
The greenback turned notably lower against the euro in North American trading Wednesday, after a Federal Reserve policy statement showed the U.S. central bank less positive in its assessment of the nation's economic outlook. See Wednesday's Currencies report.
