Dollar Rebounds after Eurozone data Disappoints
Pakistan Times Business & Commerce Desk

LONDON (UK): The dollar rebounded slightly against the euro and yen on Monday, as disappointing eurozone data and a poor showing by Japanese stocks weighed on the US unit’s rivals.

The single European currency fell to 1.2292 dollars from 1.2319 late on Friday in New York. The dollar rose to 108.70 yen from 108.30 on Friday.

The euro took a knock Monday from the latest eurozone purchasing managers’ report for the services sector that showed a fall bigger than expected.

The Purchasing Managers Index, which measures future economic activity, fell to 55.3 points in June, compared with 55.8 points in May, said NTC Research, which conducted the survey.

Analysts’ View

Analysts’ consensus was for a drop to 55.6 points. “The (eurozone) recovery scenario may still be in place but... this is not an all clear just yet,” Canadian Imperial Bank of Commerce economist Audrey Childe-Freeman said.

The euro had risen to its highest level since early June on Friday, as the dollar suffered at the hands of disappointing US jobs data.

Headline June non-farm payrolls in the United States came in well short of forecasts, while data for May and April were also revised down, raising fresh doubt on the outlook for the US economy.

The closely watched job creation indicator rose only 112,000, well below the 244,000 expected, while figures for May and April were shaved by 13,000 and 22,000 respectively.

Yen Falls

Meanwhile on Monday, the yen fell against major currencies on weaker Japanese shares and growing expectations that Prime Minister Junichiro Koizumi could suffer a setback in Sunday’s upper house election, dealers said.

The Tokyo Stock Exchange’s benchmark Nikkei-225 index closed 1.53 percent lower at 11,541.71 points on Monday.

“Voters are angered by Prime Minister’s Koizumis policy in Iraq and his plans to force people to contribute more to state pensions,” Bank of Tokyo-Mitsubishi economist Derek Halpenny said.

Of the Market

“Markets remember that former prime minister Hashimoto resigned after a disappointing upper house election result in 1998.

“Although we doubt Koizumi will have to resign, the uncertainty this week will be enough to temper market participants enthusiasm for buying the yen,” he added.

The euro was changing hands at 1.2292 dollars from 1.2319 late on Friday in New York, 133.62 yen (133.40), 0.6712 pounds (0.6716) and 1.5181 Swiss francs (1.5180).

The dollar stood at 108.70 yen (108.30) and 1.2347 Swiss francs (1.2325).

The pound was at 1.8320 dollars (1.8341), 199.12 yen (198.63) and 2.2626 Swiss francs (2.2610).

On the London Bullion Market, the price of an ounce of gold stood at 398.55 dollars from 397.75 dollars late on Friday.●