(Bloomberg) The dollar dropped on 14 September for the first week in four on concern that last Tuesd...
(Bloomberg) The dollar dropped on 14 September for the first week in four on concern that last Tuesday's attacks, which destroyed New York's World Trade Center and damaged the Pentagon, will crimp growth in the world's biggest economy.
Investors 'will be reluctant to commit to US assets,' said Eddie Middleton, who helps oversee £5.5bn at Britannic Investment Management in Glasgow. 'The dollar may drift lower.'
The dollar fell to a two-week low of 92.01 US cents per euro from 90.94 on 13 September. Against the yen, it declined to 117.39, the weakest since 3 March, from 118.71. It recently traded at 117.65. The currency has lost 2.1% against the euro and 3.5% against the yen since the terrorist attacks.
The decline on 14 September against the yen was exacerbated by automatic sell orders, traders and analysts said. The US economy, which expanded at the slowest pace in more than eight years in the second quarter, may contract this quarter, said Armin Mekelburg, a currency strategist at HypoVereinsbank in Munich.
Consumer confidence dropped to its lowest level since 1993 this month, according to a University of Michigan survey published on 13 September and taken prior to Tuesday. A revised survey to be released at month's end will show confidence was worse, the university said.
The Michigan report, as well as one earlier this month showing US unemployment rising to a four-year high, 'suggests confidence is sliding,' said Adrian Cunningham, who helps oversee £20bn at Abbey National Asset Managers in Glasgow. 'This will have an impact on investor sentiment and the dollar may struggle in the next few sessions.'
A key test for the dollar will be when US stock markets re-open, analysts said. The markets were closed for a fourth day and will resume trading on 17 September, New York Stock Exchange chairman Richard Grasso said.
The market's open 'could be the trigger to increased pressure on the dollar but it's difficult to evaluate if the market is eager to sell or will hold back its activities in solidarity' over what's happened, said Mekelburg.
The economy and stock market may benefit from rebuilding efforts, traders said. Many business leaders, angry at the attacks and the idea that they may precipitate a recession, are trying to reinforce an impression of business as usual.
Cisco Systems chief executive John Chambers, expressing 'tremendous confidence in the financial systems of our country', said the computer-networking company will buy back as much as $3bn in stock over two years.
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