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The Dollar up against euro and sterling

Mon, Sep 29 2008, 11:44 GMT
by Benny Menashe

Finotec Group Inc.

The dollar was up against both the pound and euro as the $700 billion bailout plan was hammered out by Congress. The likelihood is that senate will vote by Oct 1st which will add support to the U.S economy. ``The dollar is set up for a relief rally,'' said the general manager of foreign exchange at Japan's largest currency broker. ``The U.S. rescue package is on its way to becoming law. That goes a long way to help improve sentiment for the U.S. financial sector and the dollar.''

The greenback hit one week highs against sterling as the U.K government stepped in to rescue Britain’s biggest lender. Sterling weakened as the British Government announced a rescue package for struggling mortgage lender Bradford and Bingley. The plan is to nationalise the company and sell part of the business to Spanish bank Santander. The pound fell the most in over a week against the greenback before a report out today on U.K mortgage approvals. The expectation is that approvals fell to their lowest levels since 1999. At 9.10 am GMT, GBP/USD was at 1.8050.

The euro also weakened as European countries stepped in to prop up Belgium’s largest financial services company, Fortis. Belgium, Holland and Luxembourg invested $16.3 billion in Fortis after its shares dropped 35% last week. In additions, investors will be looking to the European Central Bank interest rate decisions later in the week where the expectation is that rates will remain unchanged. EUR/USD was at 1.4362 at 9.10 am GMT

On Monday investors will be keeping an eye on important data releases in the UK and U.S. The States will be posting Core PCE and personal spending figures. The fore cast is that consumers in the U.S spent more in August but that prices also rose. In the U.K, data on mortgage approvals and consumer confidence will be released. The fore cast is negative with global uncertainty weighing heavy on British consumers.

Today's Economic Events

Published on  Mon, Sep 29 2008, 11:47 GMT