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The single currency rose slightly yesterday on speculation the European Central Bank may raise rates by a quarter percentage point by March in view of the pace of economic growth in the eurozone together with the Bank of England’s unexpected rate hike. ECB President Jean-Claude Trichet indicated last week that the central bank would wait till March before raising rates from the current 3.5 percent. However, trading volume was thin as U.S. markets were closed for the Martin Luther King Jr. day holiday and the dollar was confined in narrow ranges against other major currencies but dropped to a 2-week low against the British pound.
Euro traded higher from its Asian low of 1.2915 to 1.2957 in European session before easing on profit-taking as markets closed early due to the U.S. holiday.
The Japanese yen slipped against the euro and held just above a 13-month low versus the dollar despite growing expectations that the Bank of Japan will increase interest rates this week. Most investors and economists believe BOJ is likely to raise overnight rates on Thursday to 0.5 percent, the highest level since 1995. Economic data released on Monday showed core machinery orders rose by a better-than-expected 3.8 percent in November, reinforcing the view that BOJ will hike rates. However, recent warnings from former and current officials made the picture a little unclear and pressured the Japanese unit. Japan's vice finance minister Hideto Fujii also said on Monday he hoped the BOJ would support steady economic growth through its monetary policy.
Sterling extended last week’s gains and maintained a firm undertone after last week’s surprise rate hike by Bank of England, with the British pound hitting a 2 & 1/2 year high versus the euro at 0.6577 and a 2-week high against the dollar at 1.9669 in London. Robust U.K. housing data also helped push cable higher. House prices in Britain jumped 8.9 percent in November compared with 8.6 percent in the previous month. U.K. Treasury Minister Ed Balls expressed his support to the Bank of England’s pre-emptive moves, considering it as the best way to control inflation.
Economic data to be released on Tuesday include Japan industrial production, U.K. inflation data, German Zew index and U.S. Empire State manufacturing index. The Bank of Canada will announce its rate decision at 14:00GMT. ------------------------------------------------------------
Updating time : 15/01/2007 18:15 GMT
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Newly enhanced Home Page, come visit www.AceTraderFX.com and see these free info:
● Previous day's Market Highs & Lows ● Intraday & Daily Recommendations
● Daily Market Outlook ● Daily Technical Outlook ● Market Moving News
● Market Review ● Economic Indicators ● Our Recommended Trades
******************************************************
The single currency rose slightly yesterday on speculation the European Central Bank may raise rates by a quarter percentage point by March in view of the pace of economic growth in the eurozone together with the Bank of England’s unexpected rate hike. ECB President Jean-Claude Trichet indicated last week that the central bank would wait till March before raising rates from the current 3.5 percent. However, trading volume was thin as U.S. markets were closed for the Martin Luther King Jr. day holiday and the dollar was confined in narrow ranges against other major currencies but dropped to a 2-week low against the British pound.
Euro traded higher from its Asian low of 1.2915 to 1.2957 in European session before easing on profit-taking as markets closed early due to the U.S. holiday.
The Japanese yen slipped against the euro and held just above a 13-month low versus the dollar despite growing expectations that the Bank of Japan will increase interest rates this week. Most investors and economists believe BOJ is likely to raise overnight rates on Thursday to 0.5 percent, the highest level since 1995. Economic data released on Monday showed core machinery orders rose by a better-than-expected 3.8 percent in November, reinforcing the view that BOJ will hike rates. However, recent warnings from former and current officials made the picture a little unclear and pressured the Japanese unit. Japan's vice finance minister Hideto Fujii also said on Monday he hoped the BOJ would support steady economic growth through its monetary policy.
Sterling extended last week’s gains and maintained a firm undertone after last week’s surprise rate hike by Bank of England, with the British pound hitting a 2 & 1/2 year high versus the euro at 0.6577 and a 2-week high against the dollar at 1.9669 in London. Robust U.K. housing data also helped push cable higher. House prices in Britain jumped 8.9 percent in November compared with 8.6 percent in the previous month. U.K. Treasury Minister Ed Balls expressed his support to the Bank of England’s pre-emptive moves, considering it as the best way to control inflation.
Economic data to be released on Tuesday include Japan industrial production, U.K. inflation data, German Zew index and U.S. Empire State manufacturing index. The Bank of Canada will announce its rate decision at 14:00GMT. ------------------------------------------------------------
