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Daily U.S. Forex Summary

The US dollar rose against a basket of major currencies on Friday

Mon, Jul 21 2008, 07:21 GMT
by Union Bank of California Team

Union Bank of California

The US dollar rose against a basket of major currencies on Friday as stocks rallied behind a positive earnings report from Citigroup. Citigroup, the world’s largest bank in assets, posted smaller than expected losses in the 2nd quarter, further calming fears about the health of the U.S. financial sector. Citi’s earnings follow reports from Wells Fargo & Co. and JP Morgan Chase & Co. earlier this week, which also showed optimistic numbers.
Investors continue to remain uncertain of the dollar’s future due to the slumping housing market. Mortgage financer Freddie Mac said today in an SEC filing that it expects credit losses to continue to increase, and may consider raising as much as $10 billion of infusion capital from stock offering.

The Euro was largely range bound as comments from European Central Bank officials were received with mixed reviews, trading in narrow ranges between $1.5803 and $1.5850. ECB President Jean-Claude Trichet said today that euro zone growth is likely to be weak in the 2nd and 3rd quarters, although inflation remains a constant concern.

Sterling dropped to the dollar as the UK economy was hit once again with bad news from the Treasury. The Financial Times reported that UK Treasury officials are discretely working on plans to loosen fiscal rules, indicating that the current government may not be able to support the economy with existing policy. Rules state the government can only borrow to invest over the economy cycle, and that public debt must be limited to 40% of the GDP.

Domestic wholesale trade data came in stronger than expected, boosting the Canadian dollar which jumped in mid-session trading to C$1.0030. The loonie later retreated closer to C$1.0055 to the US dollar as U.S. stocks rallied. Wholesale trade jumped 1.6% in May, with sales excluding autos up 2.2%. Future growth for the currency is mixed, as oil has dropped nearly $15 a barrel this week.

The Japanese yen weakened to lows at 106.95 in early trading. Investors continue to unload the low-risk currency as the dollar strengthens on stronger equities and lower oil costs.

The Australian dollar steadied to the dollar in a narrow band between $0.9705 and $0.9735 as positive domestic data offset a strengthening U.S. dollar. Data released today showed Australian export prices rising 13.5% last quarter due to strong demand for iron ore and coal commodities from neighboring industrializing China.

The New Zealand dollar eased to just above 76 U.S. cents today as the greenback continues to gain on lower oil prices. The Kiwi hovered around 6-week highs to the dollar recently, but has since fallen more than a cent. The Reserve Bank of New Zealand will have a cash rate review next Thursday, where analysts predict it will hold interest rates steady at 8.25%.

Published on  Mon, Jul 21 2008, 07:24 GMT

Archive

• The US dollar softened as investors took profit on the greenback's recent rise
  Published On Thu, Aug 28 2008, 05:55 GMT
• The Canadian dollar rebounded, helped by higher oil prices
  Published On Wed, Aug 27 2008, 05:57 GMT
• The US dollar recouped recent losses against major currencies
  Published On Mon, Aug 25 2008, 05:49 GMT
• The Mexican peso appreciated to near 10.11 per U.S. dollar as oil prices rose
  Published On Fri, Aug 22 2008, 05:59 GMT
• The US dollar rebounded today after a brief sell-off yesterday
  Published On Thu, Aug 21 2008, 05:50 GMT

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