US Dollar stronger during session

| December 18, 2006 | 0 Comments

The US dollar strengthened Monday on profit-taking from both the euro and sterling. The greenback added 0.1 percent versus the euro to $1.3062, while it gained 0.4 percent to $1.9449 in relation to sterling. Analysts explained the moves as a result of traders abandoning short positions, wagers that the dollar would move lower. Data showed that short positions were at about $21 billion during the week ending December 12, after being at $24 billion the week before that. Even so, the current account deficit in the US seemed to predict a weaker dollar coming, with the third-quarter deficit was at $225.6 billion in the third quarter, a new record. The US current account deficit was at $217.1 billion in the second quarter.

The Japanese yen held at ¥118.12 against the greenback, while it added 0.1 percent to ¥154.35 in relation to the euro. The Bank of Japan is now expected to hold interest rates at 0.25 percent when it reports its decision on Tuesday despite a strong Tankan survey, published last week.

The Thai baht dropped over 2 percent versus the US dollar to Bt35.82 after the Bank of Thailand too action to stop the rise of the currency by imposing penalties for currency speculation. The baht has added 16.5 percent in relation to the greenback this year, rising to Bt35.06 before the new penalties were imposed.

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