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Market Review - 22/11/2007 19:29 GMT
Dollar falls to new record low versus euro on Thanksgiving
The greenback declined to a fresh record low of 1.4873 against the euro on Thursday before easing with U.S. markets closed for the Thanksgiving Day holiday. European policymakers have been relatively accommodative of the euro's rise as the single currency approaches the psychological 1.5000 level, however, some officials have stated that the euro's high exchange rate may affect exporters, especially if economic growth in the eurozone falters. German GDP for the third quarter came in at 0.9%, above the consensus forecast of 0.7%.
ECB President Trichet said on Thursday that 'excessive volatility and disorderly movements on currency markets play against global growth', but there was little reaction in the forex markets with traders leaving early due to the U.S. and Japan (Friday morning) holidays.
Another factor weighing on the dollar is the increasing likelihood that the Fed will cut rates at its next meeting on the 11th of December. Interest rate futures now show a 90 percent chance of a quarter-percentage point reduction to 4.25%, up from about 68 percent a month ago. The greenback weakened against the Swiss franc to 1.1005 while the British pound hit an intra-day of 2.0683 before retreating due to cross selling in sterling.
The Japanese yen came under some pressure early on Thursday as a rebound in the Nikkei-225 led to an increase in carry trade demand on the back of higher risk appetite. Usd/jpy and eur/jpy traded as high as 119.18 and 162.25 respectively before falling later in the day.
Economic data to be released on Friday include German import prices for October, eurozone services and manufacturing PMI and U.K. GDP for the third quarter, which is expected to rise by 0.8% and 3.3% on a quarterly and annualised basis respectively.
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Market Review - 22/11/2007 19:29 GMT
Dollar falls to new record low versus euro on Thanksgiving
The greenback declined to a fresh record low of 1.4873 against the euro on Thursday before easing with U.S. markets closed for the Thanksgiving Day holiday. European policymakers have been relatively accommodative of the euro's rise as the single currency approaches the psychological 1.5000 level, however, some officials have stated that the euro's high exchange rate may affect exporters, especially if economic growth in the eurozone falters. German GDP for the third quarter came in at 0.9%, above the consensus forecast of 0.7%.
ECB President Trichet said on Thursday that 'excessive volatility and disorderly movements on currency markets play against global growth', but there was little reaction in the forex markets with traders leaving early due to the U.S. and Japan (Friday morning) holidays.
Another factor weighing on the dollar is the increasing likelihood that the Fed will cut rates at its next meeting on the 11th of December. Interest rate futures now show a 90 percent chance of a quarter-percentage point reduction to 4.25%, up from about 68 percent a month ago. The greenback weakened against the Swiss franc to 1.1005 while the British pound hit an intra-day of 2.0683 before retreating due to cross selling in sterling.
The Japanese yen came under some pressure early on Thursday as a rebound in the Nikkei-225 led to an increase in carry trade demand on the back of higher risk appetite. Usd/jpy and eur/jpy traded as high as 119.18 and 162.25 respectively before falling later in the day.
Economic data to be released on Friday include German import prices for October, eurozone services and manufacturing PMI and U.K. GDP for the third quarter, which is expected to rise by 0.8% and 3.3% on a quarterly and annualised basis respectively.
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