Euro Reversed Gains - 30.9.2011

Asian stocks were relatively lower today, following yesterday’s modest gains in US markets, despite US economic reports finally showed relatively positive figures. Japanese Nikkei Stock Average lost 0.01% by the end of the trading session, while US S&P 500 gained yesterday 0.81%. The yen and the dollar, however, strengthened today against most of their major counterparts as economic data in Europe added to signs that global growth is slowing, supporting demand for haven currencies. US Dollar The greenback rose today in Asian trading hours, reversing yesterday’s losses. Reports showed yesterday that the US economy grew faster than earlier estimated and jobless claims declined. The US economy expanded at a 1.3% annual pace in the second quarter, and initial jobless claims dropped by 37000 last week to 391000, the fewest since April, according to government data. The revised rise in the gross domestic product compares with a 1% gain previously calculated. The number of contracts to purchase previously owned US homes however fell in August, a sign that lower prices and borrowing costs are doing little to stoke demand. The 1.2% decrease in the index of pending home sales followed a 1.3% drop the previous month, the National Association of Realtors reported yesterday in Washington, while economists predicted even a deeper drop of 2%. Today reports may reveal that personal spending in the US rose by 0.2% in August after a 0.8% increase in the previous month, according to the preliminary estimations before the Commerce Department releases the figures. Euro The euro strengthened yesterday, but reversed its gains this morning, falling to 1.35 against the dollar as German retail sales declined the most in more than four years in August with concerns about the economic impact of Europe’s sovereign debt crisis sapping consumers’ willingness to spend. Sales, adjusted for inflation and seasonal swings, slumped by 2.9% from July, when they rose by 0.3%, the Federal Statistics Office in Wiesbaden said today. That’s the biggest drop since May 2007, while economists predicted a 0.5% fall. The single currency gained ground yesterday as the lower house of parliament in Germany, voting 523 in favor and 85 against, approved giving the European Financial Stability Fund powers to buy bonds in secondary markets, enable bank recapitalizations and offer precautionary credit lines. The euro fell today from 1.3600 to 1.3506 (a four day low) after touching yesterday 1.3678 against the dollar.