Dollar Slips

The US dollar is mostly lower today, with sterling leading the way. Corporate acquisitions, or talk of them at any rate, with the help of the second consecutive rise in the Halifax home price index, and as expected manufacturing data (+0.3% in July) helped sterling bounce 2 cents off yesterday’s low to test $1.55 today before running into offers. The selling pressure seen on the euro since Monday’s move to almost $1.2920 continued, but the momentum appears to be fading and some near-term recovery toward $1.275 seems likely. Japanese officials appear to be stepping up their rhetoric, but the market hasn’t blinked, talking the dollar down to new multi-year lows. The JPY84.00-20 area looks like the near-term cap.

Global equity markets are weaker. The MSCI Asia-Pacific Index was off 1%. The Nikkei led the regional decline with a 2.2% decline, sparked in part by heightened concern about the impact of the yen’s rise on corporate sales and profits. The Philippine index was one of the region’s bright spots in the region with a 0.8% rise, led by consumer services and basic materials. We continue to note good foreign demand for Philippine shares. European bourses are off a little more than 0.75% near midday in London. Financials are leading to the downside amid heightened funding concerns. Capturing the attention today, the National Bank of Greece announced intentions to raise ~$3.6 bln in new capital (Greek financials are off ~4.5% while the overall Athens Stock Exchange was off 2.5%).

The heightened concerns that are weighing on European financial shares are also being felt in the bond market. Ireland and Portugal are paying historic widen premiums over Germany with today’s moves. Greece is paying the most since before the early May EU/IMF package. Comments by the head of the EU’s stats agency that the full details of Greece’s secret financial transactions have not been disclosed. Portugal’s bond auction went off without much fanfare and the spread narrowed a bit. The US Treasury auctions $21 bln of 10-year note.