Dollar Gains Against Euro, Yen as U.S. Stock Futures Rebound
By Aaron Pan and Kosuke Goto
July 25 (Bloomberg)
The dollar gained the most against the euro in almost five months after futures on U.S. benchmark stock indexes
rebounded from a slump yesterday.
The U.S. currency also advanced after European companies including Volvo AB reported weaker-than-anticipated
earnings. Average profit growth among U.S. firms in the Standard & Poor's 500 Index has so far exceeded analysts'
forecasts. A technical chart some investors use to gauge currency movements indicated the euro's gain to a record this
week was too rapid.
``Stocks are doing better now than yesterday,'' said Marios Maratheftis, a currency strategist in London at Standard
Chartered Plc. ``The mood is for the dollar to continue its recovery. The market's still in a risk-seeking period.''
Against the yen, the U.S. currency rose to 120.53 as of 8:17 a.m. in New York, from 120.25 yesterday. The dollar gained
0.6 percent to 1.3740 per euro, the biggest rally since March 5.
U.S. stock-index futures advanced after profits that topped analysts' estimates at Boeing Co. and Amazon.com.
About 40 percent of the companies in the Standard & Poor's 500 Index posted second-quarter results as of yesterday.
Profit growth has averaged 9.6 percent so far, exceeding the 5.8 percent increase predicted by analysts in a Bloomberg
survey.
The euro also fell against the pound, and the Canadian and Australian dollars on speculation European banks may be
affected by the U.S. subprime losses.
Bank Threat
``There are rumors that a couple of German banks will be downgraded on subprime,'' said Gareth McHale, a currency
trader at Bank of Ireland Global Markets in Dublin. ``People may be using this as an excuse to sell euro-dollar.''
The euro's drop accelerated at $1.38 versus the dollar, where there were orders to sell the currency, McHale added.
The euro also weakened before a report tomorrow that's expected to show German business confidence declined for a
second month in July. The Ifo institute's sentiment index, based on responses from 7,000 executives, slipped to 106.4
from 107 in June, according to economists in a Bloomberg News survey.
``Possible frustration amongst euro longs over the unit's distinct lack of progress against the dollar this past week'' may
lead to a weaker euro before this week's data, said Neil Mellor, a currency strategist at Bank of New York in London.
The dollar's gains may be tempered before an industry report today that's forecast by economists to show sales of U.S.
homes slid to the lowest in four years.
The National Association of Realtors will report existing- home sales slid to 5.86 million last month, the lowest since April
2003, according to the median forecast of 73 economists surveyed by Bloomberg News. A Commerce Department
report tomorrow is predicted to show new home sales declined last month to 890,000, close to the lowest in almost
seven years.
``The market's anticipating softer numbers from home sales today,'' said Daragh Maher, senior currency strategist at
Calyon in London. ``There's a risk euro-dollar will push higher. Everybody's talking $1.40.''
To contact the reporter on this story: Aaron Pan in London at apan8@bloomberg.net ; Kosuke Goto in Tokyo at
kgoto2@bloomberg.net
Additional Articles For further study:
"Dollar Gains Against Euro; Yen as US Stock Futures Rebound" Bloomberg 7/25/07
"Asian Stocks Rebound; Led by JFE Holdings" Bloomberg 7/30/07
"Dollar Decline Looks Set to Resume Next Week" FX Outlook 7/27/07
"Inflation in India; How to Tackel it" Rediff 3/21/07
"The Coming Collapse of the US Dollar" Rediff 6/11/07
“Signs of the Times” by Dr. Irwin Kellner
“Fed Chickens Out” by MoneyNews.com editors
“Gold, What's Next” by Mary Anne and Pamela Aden 7/25/07
“Industrial Metals Rise - Gold Also Gains" 7/20/07
“GOLD: Big Picture Focus” by Mary Anne and Pamela Aden
"Oil Rebounds Following Decline of the Dollar" 727/07
"Set to Resume Next Week" by FX Outlook 7/27/07
"The Faultlines in the Economy" by Alan Maas
"U.S. Current-Account Deficit Deserves Some Noise" by John M. Berry
"Why the sudden dollar plunge?" By John Stepek, MoneyWeek
If you have any questions regarding these or any other articles you've read, feel free to contact me by calling me
directly David Hellier at (877) 314-COIN (2646) or email me anytime at dave@superiordiscountcoins.com.