Dollar Falls vs. Euro

The US dollar posted its largest decline against the euro since November 2009 after last week’s jobs report dimmed hopes that the Fed will raise rates anytime soon. The euro gained 0.8% trading at $1.4538 after hovering around $1.4542 for the last three weeks. The Aussie hit a five week high vs. the US dollar as Chinese demand for Australian iron ore and coal was prompted by an unexpected increase in Chinese export numbers. Chris Turner of ING in London stated, “The global recovery story has received a shot in the arm with the quick rebound in Chinese exports. The Fed in no hurry to tighten, Asia is leading the global recovery so the dollar is weaker across the board.” This week brings the U.S. earnings season and data due includes, U.S. retail sales, industrial production and inflation data.

Euro Gains May be Limited

Many experts believe the Euro’s gains may be limited due to fiscal problems in some EU member nations. Ongoing fiscal problems in Greece combined with the threat of a Portuguese rating downgrade could limit the Euro’s recent gains. Remarks by St. Louis Federal Reserve Bank President James Bullard who said Fed rates are likely to remain at record lows for ‘quite some time’ pressured the dollar which sustained last week’s losses. Dag Muller of SEB in Stockholm stated, “The dollar went sour after the non-farm payrolls data. If the data didn’t meet expectations then it feeds the thought that there will be a prolonged period of time before the Fed hikes rates, which is what Bullard said. Stocks are higher too and oil is bid, which is another driver of a weaker dollar.”

Chinese Exports Boost Recovery Hopes

The unexpected rise in Chinese export numbers has spurred optimism for global recovery. Some experts see Asia as leading the global recovery. Chris Turner of ING in London said, “The global recovery story has received a shot in the arm with the quick rebound in Chinese exports. The Fed in no hurry to tighten, Asia is leading the global recovery so the dollar is weaker across the board.”