Daily Analysis

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Dollar up on Bailout Plan approval
Thu, Oct 2 2008, 11:07 GMT
by Benny Menashe
Finotec Group Inc.
| 1.4305 | 107.45 | 1.796 | 1.1605 |
| 1.4175 | 107.2 | 1.7875 | 1.146 |
| 1.409 | 107 | 1.781 | 1.1415 |
| 1.386 | 105.35 | 1.7635 | 1.1185 |
| 1.384 | 104.65 | 1.754 | 1.1145 |
| 1.3805 | 103.55 | 1.745 | 1.1115 |
The dollar strengthened on Thursday, nearing a one year high against a basket of major currencies, after the United States Senate passed a $700 billion bank bailout package. However, there is still uncertainty as to whether the plan will be approved by the House of Representatives after its initial rejection at the start of the week. The greenback was up against both the euro and pound as the credit crunch has continued to take its toll on European banks. There was also increased demand for the dollar from outside the U.S as banks were reluctant to lend to each other. At 9.00am GMT EUR/USD was trading at 1.3919.
Meanwhile sterling fell against the dollar after data on house prices was released showing the largest drop since 1991. Nationwide Building Society released a report stating that property values fell by 12.4% from last year, in line with expectations. Eyes will be on the BoE quarterly survey on credit conditions today. The report may add to speculation that the Bank of England will cut rates in the near future. ``The U.K. economy is on the brink of a recession,'' economists in London at Daiwa Securities SMBC Co., wrote in a research report. ``A move next month does look to be on the cards now, and this will herald an aggressive easing of policy through 2009.'' Sterling was trading at 1.7667 at 9.00am GMT
In the euro zone today investors will be watching the rate decision of the European Central Bank. The expectation is that interest rates will be held at 4.25%. However, there is growing sentiment that ECB President Jean-Claude Trichet is struggling to combat inflation while at the same time keeping Europe’s economy from stagnating. There is increased likelihood that rates will be cut in the future as the financial crisis has halted growth but reduced inflation in Europe.

Today's Economic Events
| Natural Gas Storage | USD | | 51B | | 1 | |
| Factory Orders m/m | USD | Aug | 1.30% | | 2 | |
| ECB Press Conference | EUR | | | | 3 | |
| Unemployment Claims | USD | Weekly | 493K | 475K | 3 | |
| PPI m/m | EUR | Aug | 1.10% | -0.50% | 1 | -0.50% |
| Construction PMI | GBP | Sep | 40.5 | 39 | 2 | 38.8 |
| Trade Balance | AUD | | -0.72B | 0.26B | 4 | 1.36B |
Published on
Thu, Oct 2 2008, 11:16 GMT
Archive
- The Dollar weakens as investors see the Fed maintaining stimulus
Published On Mon, Nov 23 2009, 09:13 GMT
- The Dollar advances as global stocks fall and investors look for safety
Published On Fri, Nov 20 2009, 08:20 GMT
- The Dollar rises as U.S economic outlook looks bleak and investors go for safety
Published On Wed, Nov 18 2009, 07:55 GMT
- Sterling rises as investors await the BOE inflation report
Published On Tue, Nov 17 2009, 07:04 GMT
- The Dollar surges as U.S stocks plummet and investors look for safety
Published On Fri, Nov 13 2009, 10:11 GMT
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