LONDON, 6 September 2007 — The dollar fell sharply against the euro yesterday after figures showed turmoil in the US mortgage market pushed pending home sales in July down to their lowest level in almost six years. The euro rose to $1.3667, from $1.3607 in London late on Tuesday.
The dollar fell to 115.17 yen, from 116.34 yen late on Tuesday.
Against the backdrop of volatile markets, the European Central Bank was widely forecast to freeze euro zone borrowing costs at 4.00 percent today; and the Bank of England was predicted to hold its key rate at 5.75 percent.
The euro was changing hands at $1.3667, against $1.3607 late on Tuesday, 157.39 yen (158.29), 0.6760 pounds (0.6758) and 1.6441 Swiss francs (1.6488). The dollar stood at 115.17 yen (116.34) and 1.2032 Swiss francs (1.2118). The pound was being traded at $2.0218 (2.0133).
Meanwhile, world oil prices steadied yesterday, with support from widespread expectations that OPEC will freeze its output next week, dealers said.
In London, the price of Brent North Sea crude for October delivery eased four cents to $73.88 per barrel. New York’s light sweet crude for delivery in October, firmed five cents to $75.13 per barrel.
“Crude futures were little changed ... holding onto robust gains from yesterday ahead of the weekly US fuel inventories report,” Sucden analyst Michael Davies said in London.
The US Energy Information Administration will release its inventory data on Thursday, a day later than usual owing to Monday’s public holiday in the United States.
Analysts are predicting that US crude stocks fell again last week.
Elsewhere, the market is tracking the threat to energy facilities from the ongoing Atlantic hurricane season. Although Hurricanes Felix and Dean have spared oil installations, energy output has been stopped in Mexico as a precaution.
Traders are also looking ahead to next week’s OPEC meeting in Vienna.
OPEC member Iran on Wednesday indicated it was against any increase in the cartel’s production quota.
“Currently there is sufficient oil on the market,” caretaker Oil Minister Gholam Hossein Nozari told reporters ahead of the meeting on September 11.
“There have been forecasts of one or two hurricanes and this has caused prices to rise. But our position is clear — there is a sufficient supply of oil on the market,” he said.
At its last regular meeting in March, the Organization of Petroleum Exporting Countries decided to keep its official production quota at 25.8 million barrels of oil per day.
World oil prices had shot up Tuesday after Qatar’s energy minister said OPEC would not move next week to increase the cartel’s oil output, despite calls for the organization to respond to tight global supplies and strong energy demand.
New York’s main futures contract rallied $1.04 on Tuesday, closing above $75 per barrel for the first time since Aug. 3.
But the ECB said Wednesday it was ready to counter any volatility on the euro money markets, triggering speculation it may indeed raise its key interest rates this week after all.
Peter Wadkins, of Thomson IFR Markets, said the central bank’s announcement “increases the likelihood that the ECB will not proceed with the rate hike alluded to back in early August.” Attention will focus Thursday on ECB President Jean-Claude Trichet’s accompanying comments for clues about the likelihood and timing of future eurozone rate changes.
Global markets were shaken in August by rising US home loan defaults, hitting banks and funds that own “subprime” or high-risk mortgage-backed securities and prompting fears of a liquidity shortage.
On Wednesday, a report by the US National Association of Realtors (NAR) showed a sharp drop in pending sales of existing homes in July.
The NAR said its index, based on purchase contracts signed in July, had fallen 12.2 percent from in June. The gauge has fallen 16.6 percent from July a year ago.
The snapshot suggests home sales are likely to continue falling in coming months.
The latest poor data from the US is another signal that its economy is slowing, heightening fears that a wider deceleration, sparked by August’s market turmoil, is to come.
In response to this, speculation is now rife that the Federal Reserve Bank will cut its benchmark interest rate at its next meeting on Sept 18, possibly by more than a quarter point.
Amid concern about the impact of the US housing woes on the overall economy, investors were waiting anxiously for the Federal Reserve’s “Beige Book” report later Wednesday - a collection of anecdotal economic reports from around the country - and for a key monthly jobs report on Friday.
“There’s a stream of mixed messages coming out of the US as to the precize state of the economy and just how large the associated impact of the sub-prime lending collapse will be,” said David Jones at CMC Markets.
The euro was changing hands at 1.3667 dollars, against 1.3607 dollars late on Tuesday, 157.39 yen (158.29), 0.6760 pounds (0.6758) and 1.6441 Swiss francs (1.6488).
The dollar stood at 115.17 yen (116.34) and 1.2032 Swiss francs (1.2118).
The pound was being traded at 2.0218 dollars (2.0133).
On the London Bullion Market, the price of gold climbed to 680.25 dollars per ounce, from 678.75 dollars late on Tuesday.
burs rm jj AFP 051659 GMT SEP 07
GLGL EAA0545 3 F 0434 GBR AFP-XP12 Commodities-energy-oil-price lead-WRAP Oil prices underpinned by storm, OPEC concerns ATTENTION - UPDATES with latest prices LONDON, Sept 5, 2007 (AFP) - World oil prices steadied on Wednesday, with support from the ongoing US Atlantic hurricane season and widespread expectations that OPEC will freeze its output next week, dealers said.
In London, the price of Brent North Sea crude for October delivery eased four cents to 73.88 dollars per barrel.
New York’s main futures contract, light sweet crude for delivery in October, firmed five cents to 75.13 dollars per barrel.
“Crude futures were little changed ... holding onto robust gains from yesterday ahead of the weekly US fuel inventories report,” Sucden analyst Michael Davies said in London.
The US Energy Information Administration will release its inventory data on Thursday, a day later than usual owing to Monday’s public holiday in the United States.
Analysts are predicting that US crude stocks fell again last week.
Elsewhere, the market is tracking the threat to energy facilities from the ongoing Atlantic hurricane season. Although Hurricanes Felix and Dean have spared oil installations, energy output has been stopped in Mexico as a precaution.
Traders are also looking ahead to next week’s OPEC meeting in Vienna.
OPEC member Iran on Wednesday indicated it was against any increase in the cartel’s production quota.
“Currently there is sufficient oil on the market,” caretaker Oil Minister Gholam Hossein Nozari told reporters ahead of the meeting on September 11.
“There have been forecasts of one or two hurricanes and this has caused prices to rise. But our position is clear - there is a sufficient supply of oil on the market,” he said.
At its last regular meeting in March, the Organization of Petroleum Exporting Countries decided to keep its official production quota at 25.8 million barrels of oil per day.
World oil prices had shot up Tuesday after Qatar’s energy minister said OPEC would not move next week to increase the cartel’s oil output, despite calls for the organization to respond to tight global supplies and strong energy demand.
New York’s main futures contract rallied 1.04 dollars on Tuesday, closing above 75 dollars per barrel for the first time since August 3.
“The market continues to draw support from speculations that OPEC is likely to leave its output unchanged during the group’s next meeting on September 11th, despite repeated calls from many consumer nations to increase the group’s output,” Sucden’s Davies added.
burs-rfj rm AFP 051648 GMT SEP 07
