Forex summary

Daniel J. Meckstroth, chief economist at the Manufacturers Alliance/MAPI

Dow Jones - "While strong exports and easing import competition will cushion the blow to the durable goods industries, domestic demand for capital equipment is declining. New orders for non-defense capital goods excluding aircraft in the first ten months of this year are down 1.7% from the same period one year ago. The low investment activity indicates businesses remain cautious regarding the outlook for next year."

read more : Daniel J. Meckstroth, chief economist at the Manufacturers Alliance/MAPI

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FOREX-Dollar hits 1-week highs, firmer tone seen fleeting

(Changes byline, updates prices, quotes)

By Meg Clothier

LONDON, Nov 28 (Reuters) - The dollar rose to one-week highs versus the euro, the yen and the Swiss franc on Wednesday, as investors took profits on the U.S. currency's recent slump to multi-year lows and thin volumes accentuated market moves. The more positive tone on the dollar was kick-started on Tuesday after news that Abu Dhabi Investment Authority was buying an equity stake in Citigroup Inc (C.N: Quote, Profile, Research), giving confidence to investors rattled by fears of more credit market troubles as the year-end approaches.

Consequent gains in U.S. stock markets overnight [.N] attracted investors into dollar-denominated assets.

However, analysts said dollar strength was likely to be short-lived given the weak tone in U.S. economic data, prospects for further Federal Reserve interest rate cuts and the trickle of bad news from financial companies hit by the credit crunch.

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Blame for strong euro vs yuan lies with U.S.-China

BEIJING, Nov 28 (Reuters) - The euro's rise against the yuan is largely a reflection of a sharp drop in the dollar, and the European Union should look to Washington to resolve the problem, Chinese Premier Wen Jiabao said on Wednesday.

He told a news conference after a China-EU summit that Beijing would continue to reform its currency regime along market lines with the aim of eventually making the yuan convertible for purely financial transactions.

Read more:Blame for strong euro vs yuan lies with U.S.-China

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Dollar: 1.50 in the Crosshairs?

There is no doubt that the EUR/USD pair wants to target 1.5000 again and may actually reach that level this week, but it will have to do so with more substantial reasons than mere stop running. Trading in coming days could be well be driven by the housing data upon which the whole dollar arguments rests at the moment. If housing continues to plummet to subterranean depths, putting relentless pressure on the Fed to cut in December, currency traders may well feel emboldened to run the 1.500 barrier once again . However, if housing shows some signs of stabilization, the rest of the economic docket looks relatively dollar friendly.

read more:Dollar: 1.50 in the Crosshairs?


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Yen Gained On Risk Aversion

The dollar fell below 109 against the yen for the first time since June 2005. The sterling dipped to as low as 222.48 from 227.50 versus the yen, while the euro fell to 160.10 against the yen.


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The dollar is testing support

Surprisely, housing starts increased 3% to an annualize rate of 1.229 million units (1.17 million expected) in October. It has been the first increase of the past four months and was equally distributed among all the U.S. regions with the Midwest showing a move of 21.1%. Multiple houses lead the way by moving up more than 40%, while single homes declined 7.3%. It is difficult to see a bottom, as permits declined 6.6% month over month (down 24.5% year over year) and inventories stays very high.

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