Dollar rises as the market are down and China still intends to use the greenback

The greenback gained after a Chinese Foreign Ministry official said he hoped the Dollar would remain stable and was “not aware” of a plan to discuss a new reserve currency at next week’s Group of Eight meeting. The greenback rose against the euro after falling yesterday when Reuters reported that China wanted to debate proposals for a new global reserve currency at the G-8 summit in Italy. “We hope that as the main reserve currency the exchange rate of the U.S. dollar will be stable,” China’s Vice Foreign Minister He Yafei told reporters in Beijing. “This international financial crisis has fully exposed the weaknesses and loopholes in the international monetary system.” The U.S. lost more jobs than forecast an industry report showed yesterday. A 473,000 drop in the ADP Employer Services gauge was higher than the forecast of 394,000. The EUR/USD is currently trading at $1.4085 as of 8:40am, London Time.

The European Central Bank is expected to keep the interest rates unchanged on Thursday, saying it sees faint signs of economic recovery.
Eighty one of 82 economists polled by Reuters forecast the ECB would leave the refinancing rate at 1.0 percent, and the Governing Council will probably repeat that rates are appropriate at the current record low. I don't think they will change rates and I don't expect any more non-standard measures," said Citi economist Juergen Michels, who predicts rates will stay on hold well into next year. "I don't think they will shut the door on further moves, but I don't think there will be anything else unless there is another major downturn in the economy," he said.

Investor Jim Rogers said that he sees prolonged economic problems and while he did not see much worth buying, he is not shorting any assets either. He repeated his previous comment which is that he is selling his U.S. dollars and that commodities were the best investment bet to buy.
He said huge borrowing by governments, particularly in the United States and Britain, would hurt their currencies and lead to future problems, though he picked the Canadian dollar as one of the "soundest" currencies. The USD/CAD is currently trading at 1.1510 as of 9:13am, London Time.

Today's Economic Events