Daily Market Outlook

Mon, Jul 14 2008, 08:42 GMT
by AceTrader Team

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Market Review -11/07/2008 22:30 GMT

The greenback falls as credit woes cut Fed rate hike chances

The greenback fell broadly on Friday on persistent worries about the stability of two U.S. mortgage finance giants, Fannie Mae and Freddie Mac, which may constrain the Federal Reserve's ability to raise interest rates this year, however, the greenback briefly got some support against the Japanese yen after Reuters sources quoted that Fed Chairman Ben Bernanke had said these two companies would qualify for discount window borrowing.  
  
On Friday, the broad-based weakness in the greenback lifted the European currencies higher, cable rose to 1.9960 before easing and the euro rallied to a session high of 1.5949 (the highest since April 23) versus the U.S. dollar and all- time high of 169.93 against the Japanese yen. The dollar dropped as low as 105.66 versus the Japanese yen but later recovered to around 106.21 yen. The Swiss franc also advanced and touched 1.0136 versus the US dollar and last traded at 1.0160.  
  
The interest rate expectations and differentials between the United States and the eurozone have driven the dollar lower and the New York Board of Trade's dollar index, which measures the dollar's performance against a basket of six currencies, dropped to a 2-1/2-month low at 71.795, posting its largest daily fall in more than a month.  
  
A surge in oil prices to record highs and global as well as U.S. stock market losses also did not help the dollar. U.S. crude oil futures for August rose sharply, ending at a settlement price of 144.41 per barrel after jumping to an intra-day record at $147.27. The DJI tumbled more than 200 points in New York morning session but pared some of its losses later and closed at 11,100.54, down 128 points on Friday.  
  
Next Monday, economic data releases include New Zealand retail sales for May, U.K. PPI input, PPI output and PPI core for June, and eurozone industrial production of eurozone for May.

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Published on  Mon, Jul 14 2008, 09:07 GMT

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