Dollar down as BoA result dampens sentiments

Dollar fell against the Euro on Monday due to the unexpectedly weak result from the Bank of America which dampened the investors in the banking sector and also renewed concerns about the US economy.

Dollar fell against the Euro on Monday due to the unexpectedly weak result from the Bank of America which dampened the investors in the banking sector and also renewed concerns about the US economy.

Bank of America the second largest bank in US reported a fall in first quarter profit due to write downs and rising credit losses. Net income fell to $1.21 billion or 23 cents per share.

Also last week Citigroup the largest U.S. bank posted a quarterly loss of $5.1 billion and pretax write downs of $6.0 billion. But shares in the company rose as investors were appeased by efforts being made to get past its credit problems and drive down costs. But consecutive losses in the banking giants dampened the investors sentiments and ultimately affected the greenback.

Along with banking data most of the other data also were not supportive for the positive out look for the US economy.

US Housing starts dropped by 11.9 percent last month and March consumer prices rose a less than expected 0.3 percent. The weak data reinforced the expectation of rate cut in late April.

Data from the US Commerce Department showed retail sales managed to rise 0.2% in March compared with economists' consensus expectation for a 0.1% decline.

US consumer confidence sunk to its lowest level in 26 years in early April according to a report from University of Michigan/Reuters. The US consumer sentiment index fell to 63.2 in early April from 69.5 in March.

The US Commerce Department revealed the nation's trade deficit expanded unexpectedly by 5.7% to $62.3 billion in February.

Minutes from the Federal Open Market Committee meeting held in March gave a downbeat assessment of the US economy leaving the possibility of further cuts in US interest rates intact. The minutes also showed that many board members believed a recession in the first half of 2008 was likely amid declining economic growth and financial market stress.

Federal Reserve Chairman Ben Bernanke in testimony to Congress had said that the outlook for US economic growth had worsened since January and the possibility of a recession could not be ruled out.

Medium Term OutlookExpecting a short term recovery in dollar if it sustains below 1.5725 Supports are 1.5909 1.6148 1.6420. Resistances are 1.555 1.5380 1.5220 and 1.5110. But if it trades above 1.5910 more weakness can be expected. In spot dollar closed at 1.5905 (1.5813) against the euro after trading in the range 1.5947 1.5790.Last day DEUR June traded in the range 157.66 159.09 and closed at 158.84.

Spot Dollar vs Euro

TECHNICAL OUTLOOK (Intra day)

DEUR (June) Bullish above 158.83 bearish below 158.36

DATA TO WATCH

2008 April 22

Dubai time = GMT +4 hours