Sun, Nov 14, 2004 - Page 10 News List

Concern over huge US current account deficit hurts dollar


The dollar fell back against the euro and yen on Friday as strong US retail sales and consumer confidence data failed to allay concern about the US' huge current account deficit.

The single European currency rose to US$1.2975 in late European trading from US$1.2904 late on Thursday in New York.

The dollar declined to ¥105.58 against ¥106.59 on Thursday.

Better-than-expected US retail sales and consumer confidence figures gave the dollar a short-lived boost. However, the gains were erased after the release of weak business inventories data and as the market continued to focus on concerns over the US current account deficit.

"The market is not really paying any attention to any good news coming out of the US at the moment," said Standard Chartered forex analyst Marios Maratheftis.

US retail sales showed surprising strength last month, rising 0.2 percent despite a large decline in auto sales. Excluding autos, sales rose 0.9 percent above expectations for a rise of around 0.6 percent.

The widely watched University of Michigan consumer sentiment index for November was also strong, rising to 95.5 points from 91.7 in October, and again above expectations for a rise to 93.8. US business inventories showed a rise of just 0.1 percent in September, however, well below forecasts for a 0.5 percent increase.

CALYON currency analyst Daragh Maher said the retail sales report was a "reasonably upbeat report," but said with the market so bearish on dollars it was unlikely to have much impact.

"For a foreign exchange market determined to sell dollars, it is unlikely that this release is sufficiently far ahead of consensus to prompt any lasting re-think on dollar fortunes," he said.

The euro was changing hands at US$1.2975 from US$1.2904 late on Thursday in New York, ¥136.87 (¥137.57), £0.6993 (£0.7007) and 1.5213 Swiss francs (SF1.5192).

The dollar stood at ¥105.58 (¥106.59) and traded at SF1.1730 (SF1.1774).

The pound was at US$1.8550 (US$1.8411), ¥195.84 (¥196.25) and SF2.1762 (SF2.1682).

On the London Bullion Market, the price of an ounce of gold stood at US$436.05 against US$433.40 late on Thursday.

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