• Home ::
• Fundamental ::
• Market View ::
• Daily U.S. Forex Summary

• Send
• Print
• Add To
• Rss

Daily U.S. Forex Summary

a303ca1a-37d6-450f-a199-a873a3726aef

0

0

The US dollar weakened vs. major currencies

Wed, Jul 16 2008, 13:08 GMT
by Union Bank of California Team

Union Bank of California

The US dollar weakened vs. major currencies as concerns of the US financial sector continued to weigh on investor sentiment. The dollar slump comes two days after a government rescue plan to restore confidence in mortgage giants Fannie Mae and Freddie Mac. The dollar was also hurt by data that June retail sales rose a less-than-expected 0.1%, while Producer Prices climbed a larger-than-expected 9.2%. Focus is on Fed Chairman Ben Bernanke’s testimony before Congress today.

The euro hit new highs at 1.6038 against the dollar as investors continue to leave the dollar over concerns of the US financial sector. With the euro zone inflation running at a record 4%, expectations of additional rate increases by the European Central Bank from the current interest rate of 4.25% remain firm. The ZEW economic research institute released data that German investor sentiment over the outlook for Europe’s largest economy deteriorated to a record low this month. The ZEW’s gauge of expectations for Germany for July fell to -63.9 from -54.2 in June, which is the lowest figure since the survey began in 1991.

The British sterling rose against both the dollar and euro today after UK consumer inflation rose to an annual 3.8%. This dampened expectations that the Bank of England will cut the current interest rates from the current 5% as it tries to deal with the flailing economy. Analysts say that in the long run this may hurt the sterling though as preventing interest rate cuts in the short term may lead to a deeper economic slowdown.

The Japanese yen strengthened against the dollar and euro today as tumbling stock markets caused investors to unwind yen carry trades. The Japanese central bank kept rates unchanged today.

The Canadian dollar hit a six-week high against the dollar with continued concerns of the health of the US financial sector. The Bank of Canada held rates steady at 3% today, as expected, but said that inflation could rise above 4% with the continuing rise in commodity prices. The BOC gave no hint of future interest rate decisions though as it weighs its options.

The Australian dollar soared against the dollar after minutes from the central bank’s July monetary policy meeting showed that concerns on high inflation remain. Though the Reserve Bank of Australia was growing confident that current monetary policy was tight enough to combat inflation, it believed that there was enough uncertainty to keep the rates on hold presently at 7.25%

The New Zealand dollar also rallied higher against the dollar with continued troubles in the US financial sector. The kiwi is preferred against the dollar as the currency provides interest rates of 8.25%, which is sharply higher than US interest rates.

The Mexican peso weakened sharply as investors worried about troubles in the US economy affecting the Mexican economy. Mexico currently sends about 80% of its exports to the US, making it vulnerable if the US economy continues to sour.

Published on  Wed, Jul 16 2008, 13:11 GMT

Archive

• The US dollar continued its upward trend against the euro
  Published On Mon, Oct 6 2008, 06:51 GMT
• The US dollar reached a near 13-month high against the euro
  Published On Fri, Oct 3 2008, 05:41 GMT
• The US dollar rose against the euro and yen this morning
  Published On Thu, Oct 2 2008, 05:55 GMT
• The US dollar is mixed this morning against a basket of currencies
  Published On Wed, Oct 1 2008, 05:48 GMT
• The US dollar fell against the yen and strengthened slightly against the euro
  Published On Mon, Sep 29 2008, 05:45 GMT

[ View All ]

• More Reports from this Author
• More Reports from this Contributor

Union Bank of California http://www.uboc.com | info@uboc.com