The dollar remained uncertain versus its major counterparts in late morning trading Wednesday in New York, as traders focused on signs of life in the U.S. housing sector, amid expectations of more dismal corporate news.
Risk appetite picked up during the course of the morning, with traders moving capital out of the safety of the dollar and into riskier currencies such as the euro, prompting some mixed movement in the buck on the day.
The buck edged lower against the euro, with traders digesting disappointing manufacturing and export data from the Germany, the European Union's largest economy. Meanwhile, the greenback remained largely unchanged against the sterling, despite U.K. consumer confidence tying an all time low. Against the yen, the dollar moved sideways, hovering just above the 100 mark as investors awaited details regarding a third bailout package for the export giant.
U.S. home builder Pulte Homes (PHM) announced a definitive agreement to buy rival Centex Corp. (CTX) in a stock-for-stock deal valued at $3.1 billion, including $1.8 billion of net debt, which could create America's largest homebuilding company. The move is seen by some analysts as a sign of the beginning of a recovery in the housing sector.
In addition, industry data from the U.S. housing sector showed a notable increase in mortgage applications, with some economists speculating that the recent string of data may indicate that the worst is over.
The dollar edged lower against the euro in the early afternoon hours. The euro moved up to a level of 1.3286 compared to midnight's level of 1.3268. The currencies have traded in a range over the past two weeks after the euro reached a multi-week high of 1.3737 against the buck in mid-March.
Germany's Federal Statistical Office reported that exports decreased 0.7 percent in February, after economists had forecast a 3.3 percent decline. On an annual basis, overseas sales plunged 23.1 percent in February versus a 23.2 percent fall in January.
Meanwhile, the buck remained on pause versus the sterling for the week, while the U.K. issued more dismal economic data. The pound recorded a level of 1.4694 in the early afternoon, just below its overnight quote of 1.4734. With the move, the pair has stabilized after the dollar moved off of a multi-day high of 1.4599 Tuesday.
The economy of Great Britain contracted by an estimated 1.5 percent in the first three months of 2009, according to a study released by the National Institute of Economic and Social Research. The Institute also said the decline in output is very similar to the recession that began in the summer of 1979.
Moving into the early afternoon hours in New York, the buck continued to hover above the 100 mark posting a level of 100.10, below its overnight quote of 100.65.
Late last week, the greenback was able to break the psychologically important 100 mark, after speculation of a third stimulus package prompted weakness in the yen. Last week's advance brought the dollar to its highest level against the yen since early November.
Wednesday, the Bank of Japan maintained its economic assessment by saying that economic conditions have deteriorated significantly in Japan.
Meanwhile, the current account balance in Japan swung to a surplus in February, the Ministry of Finance said in a preliminary report, coming in at 1.116 trillion yen. The decline marks a fall of 55.6 percent on-year, even though the figure beat expectations for a surplus of 1.071 trillion yen, compared to the record 172.8 billion yen shortfall in January.
Other economic data showed that wholesale inventories fell 1.5 percent in February, following a revised decrease of 0.9 percent in January. Economists had expected inventories to fall by 0.6 percent compared to the 0.7 percent decrease originally reported for the previous month.
For comments and feedback: contact firstname.lastname@example.org