By Dan Molinski Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- The dollar was modestly weaker against the euro and stronger against the yen early Monday in New York as investors awaited official details of a U.S. Treasury Department plan to mop up toxic assets.
Some details of the plan, which will be announced at 8:45 a.m. EDT Monday by Treasury Secretary Timothy Geithner, have already emerged, and that helped boost global stock markets overnight. The rise in stocks has reduced appetite for dollars as a safe haven and is giving a lift to the euro and the U.K. pound.
“Investors are cautiously cheering Treasury Secretary Geithner’s pending announcement,” said Brian Kim, currency strategist at UBS. The plan could create a series of public-private investments to absorb up to $1 trillion in troubled loans and securities from banks.
Early Monday, the euro was at $1.359 from $1.356 late Friday and the dollar was at Y96.66 from Y95.90. The euro was at Y131.32 from Y130.07. The U.K. pound was at $1.4559 from $1.4440. The dollar was at 1.1286 Swiss francs from CHF1.1295 Friday.
While the dollar is weaker against the euro compared with Friday’s close, it has not weakened to Thursday’s level, when the single currency hit a 10-week high of $1.3739 on the back of the Federal Reserve’s plan to effectively print money to buy U.S. government debt and revive the economy.
Many analysts say the Fed announcement was a watershed moment that could lead to extreme dollar weakness, but the euro has not taken off quite as fast as many expected.
“Neither bull nor bear can draw much satisfaction with the U.S. dollar’s price action,” said currency analysts at Brown Brothers Harriman. “The inability of the euro to set a new high earlier today and the speed at which it came off appears to have tempered the enthusiasm.”
The dollar’s brightest spot Monday is against the yen, where it is nearly a full yen stronger from Friday’s level. Analysts say Japanese authorities are keen to prevent the yen from strengthening ahead of the end Japan’s fiscal year-end on March 31. Japanese companies often repatriate assets in late March to boost their balance sheets, a trend that can lift the yen.
-By Dan Molinski, Dow Jones Newswires; 201 938-2245; dan.molinski@dowjones.com
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(END) Dow Jones Newswires
March 23, 2009 08:50 ET (12:50 GMT)
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