In early deals on Monday, the dollar soared to a 12-day high against its UK, European and Swiss counterparts as concerns about the global economy prompted investors to seek the safety of the world's most liquid currency.
The stock markets in Asia declined today, tracking the move on Wall Street, which declined on Friday on profit taking by investors after recent rally. Financial stocks slipped after U.S. Treasury Secretary stated that big banks might need much more assistance than anticipated. The already weaker economic fundamentals and anticipation of further strain on the global economy are dampening the glimmer of hope generated by the U.S. initiatives for reviving the economy.
The dollar was also supported by lower oil prices. In Asian trading, crude oil declined 2.31% or $1.17 a barrel to $51.21 a barrel. Light sweet crude for May delivery closed at $52.34 per barrel on the New York Mercantile Exchange on Friday, down $1.96 a barrel.
The dollar, which closed last week's trading at 1.1448 against the Swiss franc climbed to a 12-day high of 1.1512 in early deals on Monday. The next upside target level for the dollar-franc pair is seen at 1.168.
During early deals on Monday, the dollar surged to 1.4133 against the pound. This set the highest point for the US currency since March 18. If the dollar advances further, it may likely target the 1.40 level. The pound-dollar pair was worth 1.4323 at last week's close.
The pound tumbled today after a report by the property industry group Hometrack showed that the average price for a home in England and Wales plummeted by a record 10.3 percent on year in March.
March's annual fall was the biggest yet in Hometrack's monthly survey of estate agents and surveyors, which started in 2000 and has persistently reported lower price falls than official government data.
Adding to pound's slide, another report showed that Britain's financial services industry is cutting jobs at the fastest rate for 16 years as it cuts costs to soften the blow of a steep fall in profitability. The CBI/PWC financial services survey, covering the three months to early March, found 9 percent of companies reporting a rise in business volumes and 56 percent saying volumes fell, giving a net 47 percent of companies reporting a fall. That marked a sixth successive quarter of declines.
The dollar strengthened to a 12-day high of 1.3174 against the euro in early trading on Monday. This may be compared to Friday's close of 1.3295. On the upside, 1.307 is seen as the next target level for the dollar.
In early trading on Monday, the dollar slumped to a 1-week low of 95.97 against the yen. If the dollar-yen pair weakens further, it is likely to target the 95.7 level. At last week's close, the pair was quoted at 97.88.
The yen gained despite a disappointing economic report from Japan. Industrial output in Japan plummeted by 9.4% in February compared to the previous month, the Ministry of Economy, Trade and Industry said. That was slightly worse than forecasts that called for a decline of 9.0% following the 10.2% decline in January. On an annual basis, industrial output dropped 38.4% compared to forecasts of a 38.1% decline after the 31.0% retreat in the previous month.
As recession fears increased in Japan, analysts expect the Japanese government may map out its third fiscal stimulus package ahead of the G20 summit this week to prop up the economy. Japan has already announced two stimulus packages with combined spending of 12 trillion yen to ease the pain from the global credit crisis.
The British final M4 money supply report for February and the Euro-zone business and consumer confidence reports for March are expected in the upcoming European session.
Across the Atlantic, there are no significant economic reports due to be released.
For comments and feedback: contact email@example.com