NEW YORK (Dow Jones)--The dollar hit a more than two-week high against the euro in afternoon trading Wednesday, as investors reassessed their riskier holdings and shifted out of stocks, commodities and high-yielding currencies.
The euro has since bounced off its lows after having sunk to $1.4712, but is still down on the day. Recently, the euro was at $1.4728, down from $1.4802 late Tuesday, according to EBS via CQG.
The dollar was at Y90.70, from Y91.82, while the euro was at Y133.54, from Y135.88. The U.K. pound was at $1.6430, from $1.6389. The dollar was at CHF1.0262, from CHF1.0219.
The Dollar Index, a trade-weighted basket of six currencies, was at 76.344, from 76.288 late Tuesday.
Breaching a key technical level of $1.4720 signals the euro could sink further, perhaps below $1.46, said Tom Fitzpatrick, chief technical analyst at Citigroup in New York.
"We went too far, too fast in a lot of these moves" in higher-yielding currencies and riskier assets, Fitzpatrick said. "We're shaky on a number of these, and there's a domino effect taking place," with stocks, commodities and high-yielding currencies all flagging, he said.
Markets slid across the board, with the Dow Jones Industrial Average down 55 points by midafternoon. Oil was trading at around $77.50, from $79.47 late Tuesday. Commodity-backed currencies, such as the Australian and New Zealand dollars, also fell back, with both currencies hitting a more than two-week low against the U.S. dollar.
Fitzpatrick said the rally in riskier assets may have gotten ahead of the economic reality on the ground. Concerns over the strength of the global economic recovery are bringing prices back to realistic levels, he said.
The fears come as investors gear up for the release of U.S. third-quarter gross domestic product Thursday. Goldman Sachs earlier Wednesday cut its GDP forecast to 2.7% from 3% in response to lower-than-expected durable goods shipments.
"Ongoing concerns over a budding recovery have pushed to one side the appetite for high yield" and is supporting the dollar, said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn.
Wednesday, 28 October 2009
WORLD FOREX: Euro Breaches Key Level, Could Sink Below $1.46
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