Thu, Apr 3 2008, 04:37 GMT
http://www.djnewswires.com/eu
CURRENCIES: Dollar Mixed As Investors Weigh U.S. Economic Outlook
By William L. Watts
SAN FRANCISCO (Dow Jones) -- The dollar was mixed against key rivals Wednesday as investors weighed better-than-expected jobs data against gloomy words from Federal Reserve Chairman Ben Bernanke.
U.S. private-sector companies added 8,000 jobs in March, according to an employment report based on ADP payrolls data. The ADP report came two days before the Labor Department issues its own data on whether nonfarm payrolls for March expanded or contracted.
Adding in some 25,000 jobs typically created by government, the ADP report suggests nonfarm payrolls grew by about 33,000 in March, a performance that would be much better than the drop of 60,000 expected in a poll of Wall Street economists.
"The positive spin on these numbers is that the deterioration in jobs growth has moderated," wrote Michael Woolfolk, senior currency strategist at the Bank of New York Mellon.
But after the data, Bernanke reminded investors that the outlook for U.S. growth has worsened since January and the possibility of a recession can't be ruled out.
"It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly," Bernanke said in testimony prepared for the Joint Economic Committee of Congress.
Bernanke's remarks and "the possibility of another negative month of non-farm payrolls growth indicates that has nothing has changed," wrote Kathy Lien, chief strategist at Forex Capital Markets LLC.
"Even Bernanke admitted that the housing market will continue to weaken, the unemployment rate should rise and the U.S. economy could contract in the first half of 2008," she said.
Another set of data from the Commerce Department showed orders for U.S.-made factory goods dropped for the second month in a row in February, as factory shipments hit their lowest level since September 2006.
Overall factory orders fell by 1.3%, more than expected, after dropping by 2.3% in January. Economists surveyed by MarketWatch were expecting factory orders to fall by 0.7% in February. Shipments, meanwhile, dropped 2.1%, the most since falling 3.8% in September 2006.
The greenback was last buying 102.29 yen, up from 101.83 yen in London earlier Wednesday and 101.85 yen in late North American trading Tuesday.
The euro bought $1.5685, up from $1.5644 in London and $1.5608 late Tuesday.
The British pound sterling traded at $1.9878, up from $1.9831 in London and $1.9754 late Tuesday.
The dollar index, which measures the greenback against a basket of currencies, was at 72.240, down from 72.534.
Inflation reading underpins euro
The euro's gains came after February producer price inflation for the 15 nations that make up the single currency accelerated slightly more than expected.
Euro-zone industrial producer prices rose 0.6% on the month, for a 5.3% rise compared to February 2007, Eurostat said. Markets had been expecting a 0.6% monthly rise and a 5.2% annual pace.
But the euro's failure to challenge tough technical resistance on Monday near its all-time high of $1.5904 set last month had set the stage for aggressive profit-taking, analysts said.
For its part, the British pound showed little lasting reaction to a raft of lending data.
The Bank of England said net lending to individuals rose by 9.8 billion pounds ($19.4 billion), exceeding January's increase of 8.3 billion pounds and the previous six-month average of 9.4 billion pounds. Market expectations had been for a jump near 8.4 billion pounds.
Net mortgage lending, meanwhile, rose by 7.4 billion pounds, falling slightly below expectations calling for 7.5 billion pounds but matching January's pace. February mortgage approvals totaled 73,000, slightly above expectations for a figure of 72,000 after 74,000 approvals were seen in January.
By William L. Watts
SAN FRANCISCO (Dow Jones) -- The dollar was mixed against key rivals Wednesday as investors weighed better-than-expected jobs data against gloomy words from Federal Reserve Chairman Ben Bernanke.
U.S. private-sector companies added 8,000 jobs in March, according to an employment report based on ADP payrolls data. The ADP report came two days before the Labor Department issues its own data on whether nonfarm payrolls for March expanded or contracted.
Adding in some 25,000 jobs typically created by government, the ADP report suggests nonfarm payrolls grew by about 33,000 in March, a performance that would be much better than the drop of 60,000 expected in a poll of Wall Street economists.
"The positive spin on these numbers is that the deterioration in jobs growth has moderated," wrote Michael Woolfolk, senior currency strategist at the Bank of New York Mellon.
But after the data, Bernanke reminded investors that the outlook for U.S. growth has worsened since January and the possibility of a recession can't be ruled out.
"It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly," Bernanke said in testimony prepared for the Joint Economic Committee of Congress.
Bernanke's remarks and "the possibility of another negative month of non-farm payrolls growth indicates that has nothing has changed," wrote Kathy Lien, chief strategist at Forex Capital Markets LLC.
"Even Bernanke admitted that the housing market will continue to weaken, the unemployment rate should rise and the U.S. economy could contract in the first half of 2008," she said.
Another set of data from the Commerce Department showed orders for U.S.-made factory goods dropped for the second month in a row in February, as factory shipments hit their lowest level since September 2006.
Overall factory orders fell by 1.3%, more than expected, after dropping by 2.3% in January. Economists surveyed by MarketWatch were expecting factory orders to fall by 0.7% in February. Shipments, meanwhile, dropped 2.1%, the most since falling 3.8% in September 2006.
The greenback was last buying 102.29 yen, up from 101.83 yen in London earlier Wednesday and 101.85 yen in late North American trading Tuesday.
The euro bought $1.5685, up from $1.5644 in London and $1.5608 late Tuesday.
The British pound sterling traded at $1.9878, up from $1.9831 in London and $1.9754 late Tuesday.
The dollar index, which measures the greenback against a basket of currencies, was at 72.240, down from 72.534.
Inflation reading underpins euro
The euro's gains came after February producer price inflation for the 15 nations that make up the single currency accelerated slightly more than expected.
Euro-zone industrial producer prices rose 0.6% on the month, for a 5.3% rise compared to February 2007, Eurostat said. Markets had been expecting a 0.6% monthly rise and a 5.2% annual pace.
But the euro's failure to challenge tough technical resistance on Monday near its all-time high of $1.5904 set last month had set the stage for aggressive profit-taking, analysts said.
For its part, the British pound showed little lasting reaction to a raft of lending data.
The Bank of England said net lending to individuals rose by 9.8 billion pounds ($19.4 billion), exceeding January's increase of 8.3 billion pounds and the previous six-month average of 9.4 billion pounds. Market expectations had been for a jump near 8.4 billion pounds.
Net mortgage lending, meanwhile, rose by 7.4 billion pounds, falling slightly below expectations calling for 7.5 billion pounds but matching January's pace. February mortgage approvals totaled 73,000, slightly above expectations for a figure of 72,000 after 74,000 approvals were seen in January.
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