Finance Markets

July 19, 2006

US dollar weakens on interest rate speculation

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The US dollar weakened on Wednesday after Federal Reserve Chairman Ben Bernanke told a Congressional committee that both economic growth and the growth of inflation could be slowing down soon. While far from predicting an economic crash, the comments led most analysts to cut the chance that the Fed will raise interest rates in August despite new data that showed core inflation up more than had been expected.

The greenback dropped 0.2 percent versus both the Japanese yen and the Swiss franc, to ¥117.07 and SFr1.2498 respectively, while it fell 0.4 percent to $1.2557 in relation to the euro and was down 0.7 percent to $1.8376 against sterling.

Sterling strengthened in relation to other currencies as well, despite the fact that the release of minutes from the most recent Bank of England meeting showed that all seven members of the monetary policy committee had voted to keep interest rates at 4.5 percent. Besides its gain against the US dollar, sterling added 0.2 percent to £0.6832 versus the euro, was up 0.4 percent to SFr2.2967 in relation to the Swiss franc, and gained 0.5 percent to ¥215.10 versus the yen.

Emerging currencies benefited from the speculation that US interest rate rises will soon end. The South African rand added 1.2 percent to R7.071 versus the greenback while the Icelandic krona was up 1.5 percent to IKr74.26 to the dollar.

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July 18, 2006

US dollar strengthens against euro, yen

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The US dollar was stronger on Tuesday as several dollar-positive reports were released. Producer prices for finished products were 4.9 percent higher, indicating that consumer inflation data, due to be released on Wednesday, will also be higher. In addition, inflows into the United States were at $69.6 billion May, enough to cover that month’s trade deficit.

The dollar was up 0.2 percent to $1.2495 in relation to the euro, while it also added 0.2 percent versus the Japanese yen to ¥117.44 and it was up 0.4 percent against the Swiss franc, to SFr1.2529.

The greenback was, however weaker in relation to sterling, dropping 0.4 percent to $1.8264. Sterling was also stronger versus the euro, the yen, and the Australian dollar. The UK currency added 0.6 percent to £0.6842 versus the euro, while it was up 0.7 percent to ¥214.51 against the yen and by the same percentage to A$2.4479 versus the Australian dollar.

Sterling was aided by an increase in consumer inflation, which was up 0.3 percent on a month-on-month basis in June. Along with recent data from the housing sector, analysts saw the higher inflation numbers as tending to favor future rises in UK interest rates.

Elsewhere, the New Zealand dollar was up 0.7 percent to $0.6252 in relation to the US dollar. The latest increase brought the kiwi up 5.3 percent since it hit a low at the end of June. Higher inflation and surging retail sales in New Zealand have some analysts saying that interest rates, now at 7.25 percent, could go higher.

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July 17, 2006

US dollar strengthens on data

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The dollar strengthened on Monday as investors looked for safe places to put their money as conflict in the Middle East seemed to be getting worse by the day. In addition, new data showed that US industrial output was up in June, and US Federal Reserve chairman Ben Bernanke is expected to leave the door open to further interest rate hikes when he testifies before the Senate Banking Committee on Wednesday.

The US currency was 0.9 percent higher to $1.2524 versus the euro after going as high as $1.2511 earlier in the day. In addition, the dollar was up 0.8 percent in relation to sterling, to $1.82, while it added 0.6 percent against the Japanese yen to ¥117.07.

The Swiss franc was 0.9 percent lower versus the US dollar, to SFr1.248.

Reports that consumer price inflation in the Eurozone was at 2.6 percent in June, right where it had been in May, the euro weakened slightly, dropping 0.1 percent versus sterling to £0.6879, while it was down 0.2 percent in relation to the yen, to ¥146.64.

The yen declined to eight-year lows against both sterling and the Swiss franc to ¥213.85 and ¥94.34 respectively.

Elsewhere, the Icelandic krona was down 1.3 percent to IKr96 in relation to the euro.

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July 13, 2006

Swiss franc strengthens

Filed under: Forex, USD, GBP, Euro, Economy

With the world seeing political strife and other problems in Iraq and Iran, in North Korea, in Nigeria, and now in Israel and Palestine, the Swiss franc again seems to be living up to its reputation as a safe investment in times of trouble. In recent weeks, the Swissie has been falling, but Thursday saw it add 0.2 percent to SFr1.2321 versus the US dollar, and it was 0.3 percent higher in relation to the euro.

Sterling was also up amid the world’s troubles, but analysts were divided on the reasons for its gains. Some said it was a result of buying by Middle Eastern nations that don’t want excessive exposure to the US dollar, while others attributed it to mergers and acquisitions moves in the UK. Whatever the reason, sterling gained 0.4 percent to $1.8404 against the US dollar and it was up 0.5 percent to £0.6886 versus the euro.

Elsewhere, the Australian dollar added 0.2 percent to $0.7532 in relation to its US counterpart after a report said that 52,000 jobs were created in June, when only 10,000 jobs were expected to be created. In addition, analysts expect the Reserve Bank to raise interest rates to 5.75 percent at the beginning of August.

The Israeli and Lebanese currencies both saw declines after attacks by Israel on Lebanese targets. The Israeli sheckel lost 1.6 percent to the US dollar, to Shk4.508, bringing its decline over two days to 2.9 percent. The Lebanese pound lost less than that after the central bank there intervened, falling a fraction to L£1,514 versus the greenback.

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July 12, 2006

Yen weakens ahead of Bank of Japan meeting

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The US dollar strengthened on Wednesday, helped by the news that May’s trade deficit was not as large as had been expected. While May’s deficit was half a million dollars more than April’s figure, at $63.8 billion it was lower than the $64.9 billion that had been predicted by analysts. The lower number was due to an upturn in exports from the US.

The greenback added 0.4 percent to $1.2706 in relation to the euro, while it was up 0.5 percent to $1.8346 against sterling, 0.6 percent higher versus the Swiss franc at SFr1.2341. The US currency gained 1 percent against the Japanese yen to ¥115.42.

The yen dropped in relation to other currencies as well as investors were hesitant ahead of Friday’s meeting of the Bank of Japan. While most analysts expect that the Bank will abandon zero interest rates at the meeting, the Japanese finance minister was quoted as saying that deflation had not been defeated yet and that the Bank should not yet move away from zero interest rates.

The yen dropped 0.5 percent to ¥146.62 versus the euro, while it was down 0.8 percent to Won8.2162 in relation to the South Korean won. The Japanese currency fell 1.1 percent to ¥86.87 versus the Australian dollar.

Higher unemployment figures in the UK sent sterling 0.1 percent lower against the euro, to £0.6927. Unemployment is now at its highest level in four and a half years in the UK.

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July 11, 2006

Canadian dollar declines

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The Canadian dollar saw declines on Tuesday as the Bank of Canada not only elected to keep interest rates at their current level, but issued comments leading most analysts to the conclusion that no new rate hikes will be coming anytime soon and that the loonie will not strengthen significantly for some time.

The Canadian currency dropped 0.9 percent to C$1.1339 in relation to the US dollar, after dropping a similar amount on Monday. This, after having reached a 28-year high against the greenback when it hit C$1.095 in late May.

Meanwhile, the US dollar held its position against other major currencies as traders waited for new US trade data, due later in the day. In a sign, however, that the US currency is losing its status as reserve currency to the world, Syria announced that it will end its peg to the dollar by the end of the year. It has already put half of its $4.1 billion reserve into the euro, signaling its closer trade links to Europe.

The euro was 0.1 percent stronger in relation to the greenback, to $1.2751, while sterling remained essentially unchanged at $1.8425 after early losses when it was announced that the UK trade deficit had increased from £3.4 billion in April to £4.4 billion in May.

The Australian dollar added 0.7 percent to $0.7522 versus the US dollar, while it also was up 0.7 percent against sterling to A$2.3384. The Aussie dollar was also up in relation to the Japanese yen, to ¥85.86.

The Polish zloty was up 0.4 percent to 4.0308 as political nervousness in the wake of last week’s resignation of the prime minister lessened. Elsewhere, the Icelandic krona was up 1.2 percent to IKr74.43 to the US dollar on rumors that the interest rate there will go up again next month. The Icelandic interest rate currently stands at 13 percent.

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July 10, 2006

Yen, US dollar strengthen

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The Japanese yen strengthened on Monday as expectations grew that the Bank of Japan will allow interest rates to rise above zero for the first time in five years when it meets later in the week. Also helping the yen to rise were bank lending that was up to a ten-year high in June and higher than expected machinery orders.

While the yen stayed more or less steady against the US dollar at ¥113.97, it added 0.4 percent versus both sterling and the Australian dollar, to ¥209.84 and ¥85.26 respectively. The Japanese currency was up 0.5 percent to ¥145.31 in relation to the euro.

The dollar was also stronger Monday, but once again analysts were at a loss to explain the demand for the greenback. Some theorized that reports that the budget deficit might end the year lower than had been expected are the explanation, while others thought that traders were paying more attention to earnings growth and unemployment rate levels rather than to the disappointing jobs creation data announced last week.

The US currency was up 0.4 percent to $1.8417 in relation to sterling, while it added 0.5 percent to $1.2749 versus the euro, 0.6 percent to Sfr1.2296 against the Swiss franc, and 0.9 percent to C$1.1237 in relation to the Canadian dollar. It is expected by some analysts that the Bank of Canada will raise interest rates to 4.5 percent when it meets on Tuesday.

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July 6, 2006

Euro gains on ECB comments

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The euro grew stronger on Thursday on new signals from the European Central Bank that interest rates will be rising again. While the ECB kept interest rates at 2.75 percent for the present, remarks from the Bank’s governor were widely read as meaning that there will be a 25-basis point hike in rates at the Bank’s August meeting. One clue, according to analysts, is that the Bank’s council will physically meet in Frankfurt in August, as opposed to the teleconferenced meeting that had been planned.

Directly after the remarks, the euro added 0.5 percent to $1.2783 versus the US dollar. By the middle of the day in New York trade, the shared currency had weakened somewhat but was still 0.3 percent higher at $1.2758 to the dollar. Likewise, the euro hit a new all time high of ¥147.41 against the yen right after the comments, but by noon in New York, the euro was 0.2 percent weaker in relation to the yen, at ¥146.85.

The yen gained 0.5 percent to ¥115.10 versus the US dollar. The Japanese currency’s strength was helped by comments from a Japanese official that the missile tests in North Korea would not have an effect on any Bank of Japan decisions concerning interest rates. It is expected by most analysts that the Bank will end its zero interest rate policy at next week’s meeting.

Sterling was mixed, dropping 0.2 percent to €0.6944 in relation to the euro but adding 0.2 percent to $1.8358 versus the US dollar. The Bank of England voted to once again keep UK interest rates at 4.5 percent.

In Iceland, a decision by the central bank to raise interest rates to 13 percent, a gain of 75 basis points, sent the krona down 0.5 percent to IKr75.60 in relation to the US dollar.

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July 5, 2006

Jobs numbers help US dollar

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The US dollar strengthened on Wednesday after new figures were released, saying that 368,000 new jobs were created in June. It had been estimated that the month would see 155,000 new jobs created in the month. Analysts said that if the ADP National Employment Report numbers are accurate, the wage inflation that could result will likely spur the Federal Reserve to continue raising interest rates. In addition, a separate report showed that US factory orders were higher than had been anticipated. Some analysts warned, however, that the ADP report figures might not match Bureau of Labor Statistics numbers when they are announced on Friday.

The greenback added 0.4 percent to C$1.1123 in relation to the Canadian dollar, while it was up 0.5 percent versus both sterling and the euro, to $1.8345 and $1,272 respectively. The US currency gained 0.7 percent to ¥115.66 against the Japanese yen.

Asian currencies dropped in the wake of the North Korean missile tests on Tuesday, but the declines weren’t huge. The yen dropped 0.2 percent to ¥147.15 versus the euro after going to a low of ¥147.31 during the day. The South Korean won, meanwhile, was down 0.4 percent against the US dollar to Won946.31.

A further indication that the missile tests will not have a large or permanent impact on currency markets is the fact that the Swiss franc, traditionally considered a safe haven in times of upheaval, dropped 0.2 percent to SFr1.5691 against the euro and was down 0.7 percent to SFr1.2331 versus the greenback.

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July 4, 2006

Asian currencies gain on US dollar

Filed under: Forex, USD, GBP, Euro, Economy, Yen

With currency trade light on Tuesday as the United States took the day off for the Independence Day holiday, several Asian currencies took the opportunity to make gains against the greenback. The South Korean won added 0.2 percent versus the dollar to Won 943, while the Thai baht gained 0.4 percent to Bt37.855 and the Indonesian rupiah was up 0.9 percent to Rp9,060 to the dollar.

In Mexico, the peso also gained on the US currency, hitting a six-week high of 11.049 pesos to the dollar. The gain came on speculation that Sunday’s presidential election in Mexico would be won by the conservative candidate, Felipe Calderon, who is perceived to be pro-business.

The Japanese yen was at ¥114.56 in relation to the US dollar, at ¥146.59 against the euro, and at ¥211.51 versus sterling.

The Swiss franc was weaker against both the euro and sterling. It was at a two-month low of SFr5681 in relation to the euro, while it dropped 0.3 percent to SFr2.2616 against sterling.

The Hungarian forint, however, gained 0.5 percent to Ft278.99 versus the euro. It has lost 7.6 percent to the shared currency since the middle of May. The Swedish krona also gained in relation to the euro, adding 0.2 percent to SKr9.1691. An analyst at Citigroup said that he thinks the Riksbank will raise interest rates in Sweden by 125 basis points in the next year, for the fastest rise in the G10 nations.

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July 3, 2006

US dollar slightly stronger amid low trade volumes

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The US dollar held steady against the euro and saw slight gains in relation to the yen and sterling on Monday after the US Institute of Supply Management’s purchasing managers’ index was shown to be off unexpectedly in June. Some analysts said that with low trade volume ahead of the Independence Day holiday in the United States, that reaction to the new data could be delayed.

While the greenback sank to a three-week low versus the euro immediately after the new data was revealed, it had was back to its starting level of $1.2793 against the shared currency by midday. The US currency added 0.3 percent to $1.8415 in relation to sterling, and gained 0.4 percent to ¥ 114.87 in relation to the Japanese yen.

The euro, meanwhile, was stronger as the Eurozone manufacturing purchasing managers’ index was it a six-year high in June at 57.7, up from 57.0 in May. In addition, Eurzone unemployment fell to a four-year low of 7.9 percent in June.

The shared currency added 0.2 percent to SFr1.5673 versus the Swiss franc, while it gained 0.4 percent to £0.6946 in relation to sterling and was up 0.5 percent to a new high of ¥146.93 against the yen.

The weakness in the yen came even though the latest Tankan survey from the Bank of Japan shows that business confidence is up in Japan, a sign that the Bank could end its policy of zero interest rates when it meets later this month.

In addition to its declines in relation to major currencies, the yen dropped 0.4 percent to ¥85.32 versus the Australian dollar and it fell 0.7 percent to Won8.2252 in relation to the South Korean won.

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June 29, 2006

US dollar moves little ahead of Fed decision

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The US dollar did not move much ahead of the Federal Reserve’s decision on interest rates on Thursday. Most analysts expected US interest rates to go up by 25 basis points to 5.25 percent. In addition, most expected the comments that will come along with the Fed’s announcement to imply more rate hikes while leaving room for a pause in the series of hikes if the data demands it.

At mid-session in New York, the dollar had added 0.1 percent to $1.2545 in relation to the euro, while it had dropped 0.2 percent versus the Japanese yen to ¥116.15.

In Japan, meanwhile, Kozo Yamamoto, the head of the ruling Liberal Democratic party issued the latest call for Bank of Japan governor Toshihiko Fukui to resign his position over his dealings with a fund manager who stands charged with insider trading. However, some analysts believe that this call will not have much influence on other senior Japanese officials due to Mr. Yamamoto’s perceived sentiments toward the Bank of Japan.

Elsewhere, sterling lost value after the governor of the Bank of England made comments that indicated any interest rate hikes in the UK in the near term are unlikely. The UK currency dropped 0.3 percent versus the US dollar to a two-month low of $1.8134, while it declined by 0.2 percent in relation to the euro, to £0.6916.

The Hungarian forint dropped another 1.3 percent to a new record low of Ft284.10 versus the euro, while the Slovak koruna declined by 0.2 percent to SK38.380 in relation to the euro.

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June 28, 2006

Emerging currencies mixed

Filed under: Forex, USD, GBP, Euro, Economy, Yen

Some emerging currencies, which have been struggling recently, saw gains on Wednesday, while others continued to decline. Meanwhile, major currencies moved little in relation to one another as traders waited to see what the US Federal Reserve would do about interest rates later in the week.

The US dollar strengthened some as analysts expected the Fed to hike US rates by a quarter of a percentage point. The greenback was up 0.1 percent to ¥116.26 in relation to the Japanese yen, while it added 0.4 percent to $1.8171 versus sterling and was up 0.5 percent to $1.2533 against the euro.

The euro, meanwhile, also lost value in relation to sterling, falling 0.4 percent to £0.6897. The shared currency also dropped 0.1 percent versus the yen, to ¥145.7.

The Turkish lira added 1.2 percent in relation to both the US dollar and the euro, to TL1.6160 and TL2.2050 respectively after the nation’s central bank hiked its overnight lending rate another 200 basis points to 22.25 percent. However, it is still 18 percent lower than it was in April.

The South African rand also took back a portion of its recent losses as it was up 1.1 percent to R7.187 versus the US dollar. The rand was helped higher by growing inflation that boosted the chances of higher interest rates there soon.

The New Zealand dollar, the Hungarian forint, and the Icelandic krona, however, continued to lose value. The kiwi dropped over 2 percent to the US dollar, to a two-year low of $0.5933 after it was announced that New Zealand had a trade deficit in May for the first time in three months. The forint dropped 0.9 percent to Ft223.50, while the krona was down 0.4 percent to IKr76.18.

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June 26, 2006

Euro strengthens on rate hike talk

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The euro strengthened on Monday amid comments from European Central Bank officials that seem to indicate that interest rates could be hiked again sooner than expected and by more than most analysts have forecast. Also helping the shared currency higher was a rumor that Abu Dahbi could convert up to 10 percent of its currency reserves into euros.

By the middle of the session in New York, the European currency added 0.3 percent against the US dollar and against sterling, to $1.2550 and £0.6900 respectively. The euro was also up 0.1 percent versus the Japanese yen to ¥146.00, near an all-time high.

After gains on Friday, the US dollar weakened on Monday, dropping 0.2 percent in relation to both the yen and the Swiss franc, to ¥116.30 and SFr1.2465. The trigger for Friday’s gains, rumors that the Federal Reserve could raise interest rates by as much as 50 basis points this month, were dismissed by most analysts, who cited signs of a slowing economy and a plentiful supply of new houses that will likely lead to lower house prices as arguments against an outsized rate hike.

Meanwhile, the Turkish lira added 2.3 percent versus the greenback, to TL1.6690 as the Central Bank of Turkey sold dollars a day after hiking interest rates by 225 basis points to 17.25 percent.

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June 22, 2006

US dollar higher despite absence of data

Filed under: Forex, USD, GBP, Euro, Economy, Yen

Analysts were at a loss on Thursday to figure out exactly why the US dollar rallied. While some said that the greenback was benefiting from the unwinding of carry trades by US-based hedge funds and others cited greater interest rate differentials, others discounted these explanations. Still others simply termed the rally an “aberration”.

The US currency was up 0.6 percent versus the euro to $1.2590, while it gained 0.7 percent against the Swiss franc to SFr1.2413, added 0.8 percent to $1.8305 in relation to sterling, rose 0.9 percent to C$1.1181 versus the Canadian dollar, and advanced by 1.2 percent against the Japanese yen to ¥116.15. These gains included a seven-week high versus sterling and a two-month high in relation to the yen.

The US dollar also rose even more against some emerging currencies. The greenback added 1.4 percent to $0.6109 in relation to the New Zealand dollar, while it gained 1.9 percent to TL1.692 versus the Turkish lira and it was up 2.3 percent to R7.2999 in relation to the South African rand. The gain in relation to the Turkish lira took the US dollar to a three-year high against that currency, and the gains versus the kiwi and the rand came after both nations announced current account deficits that were much higher than they had been previously.

News that David Walton has died sent sterling lower. Walton was the sole member of the Bank of England’s monetary policy committee who was consistently in favor of higher interest rates. In addition to its decline against the US dollar, sterling also dropped 0.2 percent to £0.6879 versus the euro.

The yen, meanwhile, declined after a member of the Bank of Japan said that interest rates in Japan would rise “very slowly” even after zero rates are abandoned. After these remarks, the yen dropped 0.6 percent versus the euro to ¥146.23 and it fell 1.2 percent against the South Korean won to Won8.219. The decline in relation to the euro took the yen to an all-time low versus the shared currency.

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June 15, 2006

US dollar weaker

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The US dollar weakened for the second day in a row on Thursday as the US Treasury said that net inflows in April were a mere $46.7 billion in April, well below March inflows of $70.4 billion and the April forecast of $60 billion and not nearly enough to cover the $63.4 billion April trade deficit. At least some of the decline was said to represent less interest in Treasury bonds from oil exporters in the Middle East. Industrial production numbers were also weak, contributing to the declines. Even the prospect that interest rates will likely rise in both June and August did not help the US currency.

While the US dollar did add 0.4 percent to C$1.1175 against the Canadian dollar, it dropped 0.2 percent to $1.2615 versus the euro and fell 0.3 percent to $1.8481 in relation to sterling. The greenback was about even against the Japanese yen at ¥115.06.

In Hungary, the forint lost 1.2 percent to a record low Ft273.79 versus the euro. The decline came after Standard & Poor’s cut Hungary’s credit rating, predicting that the nation’s budget deficit would remain at 6.8 percent of the gross domestic product by 2009, significantly higher than the 3 percent required to join the euro.

The Polish zloty and the Czech koruna were also both lower in relation to the euro as well, with the Polish currency dropping 0.7 percent to 4.067 zlotys to the euro. The koruna declined by 0.3 percent to Kc28.393.

The Swiss franc dropped 0.2 percent to SFr1.5541 against the euro after a quarter-point hike in interest rates by the Swiss National Bank, to 1.5 percent.

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June 13, 2006

Emerging currencies fall versus greenback

Filed under: Forex, USD, GBP, Euro, Economy, Yen

In currency markets on Tuesday, the Japanese yen was down against major currencies as analysts said that recent declines in equities markets there could cause the Bank of Japan to put off its plans to begin raising interest rates. Also helping the yen down were worries concerning the upcoming Tankan survey of business sentiment and whether foreign investors will continue their current sell-off of Japanese stocks.

The yen was down 0.6 percent versus both the US dollar and the euro, to ¥115.06 and ¥144.77 respectively, while it dropped 0.5 percent in relation to sterling, to ¥211.73.

Analysts’ opinions are divided as to whether the current rally by the US dollar will continue. Some believe it may be slowing down, but others believe that US interest rates will continue to rise, which will provide incentive for further gains by the greenback. The US currency was up slightly against the euro, to $1.2582. It also rose slightly versus sterling, to $1.8399.

Currencies in the emerging markets were generally down in relation to the US dollar. The Turkish lira hit a three-year low against the greenback as it declined by 2.8 percent to TL1.5962. The New Zealand dollar dropped 1 percent to the greenback, to $0.6223, while the Indonesian rupiah declined 0.8 percent to Rp9,485 to the dollar and the South Korean won lost 0.5 percent to Won961.3.

Declining metals prices caused some currencies to decline. The Chilean peso was 0.6 percent lower at 546 pesos to the dollar on falling copper prices, while lower gold prices sent the South African rand down 1.1 percent to R6.825.

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June 12, 2006

US dollar up for sixth straight session

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The US dollar strengthened again on Monday, making its sixth straight rise in a row as more and more analysts came around to the position that the Federal Reserve will likely raise interest rates again when it meets later in the month. If the rate hike does come, it will be the 17th time in a row that the Fed has sent interest rates higher.

The greenback added 0.3 percent versus the euro to $1.2586, while it gained 0.2 percent on the Swiss franc to SFr1.2336 and rose 0.1 percent to ¥114.23 in relation to the Japanese yen.

Meanwhile, the euro also weakened slightly against the yen and the Swiss franc, to ¥143.86 and SFr1.5532 respectively. The shared currency also dropped 0.2 percent versus sterling, to £0.6825. The declines came as data shoed net-long positions on the euro are up to record high levels and as a meeting over the weekend of the G8 finance ministers closed their meeting without calling for weakening of the US dollar.

Sterling was helped by a rise in factory gate inflation that was 0.3 percent in May, which sent the annual rate to 3 percent. The UK currency was up by 0.2 percent in relation to the US dollar, to $1.8435.

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June 9, 2006

US dollar strengthens on week

Filed under: Forex, USD, GBP, Euro, Economy, Yen

The US dollar strengthened against some currencies over the week, helped by interest rate differentials, the perception of Treasury bonds as a safe place for investors to put their money, and a US trade deficit that didn’t widen as much as analysts had feared it would.

The greenback was up 2.2 percent to $1.2636 during the week versus the euro. The US currency also added 2.2 percent against sterling to $1.8428, while it was up 2.1 percent in relation to the Swiss franc to SFR1.2307 and gained 1.9 percent to ¥113.81 versus the Japanese yen. The Canadian dollar limited it’s loss to the US dollar to 0.5 percent as it gained 1.4 percent on Friday to C$1.1068.

Emerging currencies also lost ground to the dollar, with the exception of the Turkish lira, which added 1.8 percent versus the greenback to TL1.534. Otherwise, the Indian rupee dropped 0.3 percent versus the US currency to Rs45.81, the South African rand lost 0.5 percent to R6.6913, and the South Korean won and the Thai baht each lost 0.7 percent to the greenback, to Won 9054.4 and Bt38.32 respectively. The Mexican peso also dropped 0.7 percent to the US dollar, to 11.381 pesos, a 19-month low. The Icelandic krona lost 3.9 percent versus the greenback, to IKr73.90.

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June 7, 2006

US dollar strengthens for third straight day

Filed under: USD, GBP, Euro, Economy, Yen

The US dollar strengthened for a third straight session on Wednesday as officials of the Federal Reserve continued to make comments indicating that interest rates will likely be raised again when the Fed meets later in the month. Several regional Fed presidents as well as Fed chairman Ben Bernanke have said in recent days that inflation is now at the upper end of what has been referred to as the “comfortable” range. Earlier, analysts had been convinced that the Fed would break its chain of 16 consecutive rate hikes.

The greenback added 0.4 percent to SFr1.2270 in relation to the Swiss franc, 0.2 percent to $1.2796 versus the euro, and was up 0.1 percent each against the Japanese yen and against sterling, to ¥113.37 and $1.8575 respectively. Additionally, the US currency added 0.3 percent to T$32.166 versus the Taiwan dollar and was up 0.6 percent to Won947.9 in relation to the South Korean won.

Analysts are not in agreement as to whether the dollar will continue to strengthen or whether it will begin to weaken again. While some feel that the dollar will continue to strengthen, others believe that if the Fed continues to raise interest rates, it will harm the US economy, affect the global economy, and will weaken the greenback further.

Elsewhere, comments from France’s finance minister that the euro is “fully valued” have led some analysts to discount the idea that the European Central Bank might raise interest rates by 50 basis points when it meets on Thursday, rather than by the more common 25 basis points. However, the Turkish central bank raised interest rates there by 175 basis points, sending the Turkish lira up 3.3 percent versus the euro to TL1.935. The Turkish currency has lost 25 percent to the shared currency since the beginning of the year.

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