Investment-blog.net: Stocks, Emerging markets, Bonds, Currencies and Commodities

Dollar holds gains; ticks up vs. yen on S&P bond insurer news

Feb 25, 2008 Market Outlook

Dollar up as housing data not as grim as expected

By William L. Watts & Lisa Twaronite, MarketWatch

Last Update: 3:28 PM ET Feb 25, 2008

SAN FRANCISCO (MarketWatch) — The dollar got a boost against major rivals
Monday, gaining as U.S. home-sales data proved not as downbeat as many investors
had expected.

The dollar held onto its gains in the afternoon as stocks rallied following news
that Standard & Poor’s announced it had affirmed the triple-A rating of Ambac
Financial’s (ABK) bond insurance business and took MBIA Inc. (MBI) off its
CreditWatch for a possible downgrade. But except for a brief pop against the yen,
the dollar’s reaction to the S&P news was muted.

The dollar index, which measures the greenback against a basket of six major
currencies, was at 75.528, up from 75.480 before the data and 75.514 in Friday’s
late U.S. trading.

The National Association of Realtors reported resales of U.S. homes and
condominiums, on a seasonally adjusted basis, dropped 0.4% in January to an
annualized rate of 4.89 million, even as inventories of homes on the market rose.

It was the lowest sales pace since the real-estate group began tracking combined
sales in 1999 but was stronger than the 4.80 million pace that economists
surveyed by MarketWatch had been anticipating. See Economic Report.
Click for Detail

“There are some signs in this report that existing-home sales may be nearing a
bottom, but those signs are tempered by the fact that existing-home inventories
remain bloated, and homebuyers continue to feel the negative effects of the
mortgage credit crunch,” wrote David Ader, U.S. government bond strategist at RBS
Greenwich Capital.

Still, the better-than-expected headline figure was enough to lift the dollar in
an otherwise relatively quiet session.

By the same token, the dollar “remains near session lows versus most major
currencies,” wrote currency analysts at Action Economics. “From here, we expect
the greenback to remain in sell-the-rally mode, though any positive news on the
credit-market front could result in a short-covering-related dollar rally.”

Against Japan’s currency, the dollar bought 108.08 yen, up from 107.62 yen before
the data and 107.24 yen late Friday. The dollar rose as high as 108.19 yen after
S&P’s announcements about the bond insurers. See real-time currency prices.
Click for Detail

The euro stood at $1.4820, down from $1.4831 before the homes data and $1.4829
Friday.

The British pound sterling was trading at $1.9665, down from $1.9690 earlier
Monday. It was trading at $1.9673 late Friday.

On Wall Street, stocks opened with slight gains, then quickly lapsed into
negative territory, only to later bounce back after the home-sales data. Major
indexes rallied after the S&P news. See Market Snapshot.
Click for Detail

Ambac report lifts sentiment

In European trading earlier Monday, dollar gains played off ongoing talk of a
potential bank-led aid plan for troubled bond insurer Ambac.

The Wall Street Journal reported Monday that a deal to pump about $3 billion into
Ambac (ABK) remained on track to be completed later in the day or Tuesday, if
approved by credit-rating firms.

Such indications helped boost Asian and European stocks Monday, analysts said.

Did you like this? If so, please bookmark it, about it, and subscribe to the blog RSS feed.

Possibly Related Posts:

• Depression? Oversold? Just the beginning? Close to the end? You will find zero guidance from quality analysts.
• A List of ETFs You Should Know In Stock Market
• Florida pension fund loses a quarter its value
• Good bye to U.S dollar. Say hello to Gold and Amero
• S&P 500 losses nearly $1 trillion more than 2000-02

Did you like this? If so, please bookmark it, about it, and subscribe to the blog RSS feed.