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Greenback weakens in Asia on U.S. mortgage woes

Greenback weakens in Asia on U.S. mortgage woes

The U.S. dollar edged down against the yen in Asian trade yesterday as weak data renewed market vigilance over the troubled U.S. home loan market, dealers said.
They also said the euro was weaker against the greenback after European Central Bank president Jean-Claude Trichet said overnight that the ECB was not pre-committed to any rate moves.
The U.S. dollar fell to 115.47 yen in Tokyo from 115.87 in New York Monday. The euro declined to US$1.3624 against US$1.3645 and to 157.32 yen after 158.16.
Global markets have been in turmoil in recent weeks over problems in the U.S. subprime home loan market, where borrowers with shaky credit histories defaulted on mortgages, raising fears of a liquidity shortage as investors cover losses.
Data released Monday said that U.S. home sales fell in July to the lowest level in nearly five years. While the data came within expectations, it was a letdown after strong new home sale data last week.
"Players cannot buy the U.S. dollar actively as the conclusion of the subprime loan issue has yet to be seen," said Satoshi Tansho, a dealer at Chuo Mitsui Trust Bank.
"First, we want to know how seriously the issue has affected consumer sentiment," Tansho said, adding that the market will look closely at the U.S. consumer confidence index for August to be released later in the day.
The euro faced mild selling pressure after Trichet implied Monday that the ECB jury was still out regarding an interest rate increase owing to the financial market turbulence.
"Following Trichet's remarks, players were forced to reset their interest rate hike scenario," Tansho said.
Trichet declined to answer questions about whether the bank would raise rates in the eurozone on September 6, but said: "We are never pre-committed, to qualify what I have said on strong vigilance."
"Strong vigilance" is an ECB code phrase for raising rates in the near term.


Updated : 2021-05-08 08:28 GMT+08:00