US dollar strengthens

| March 7, 2006 | 0 Comments

Movement in the prices of US Treasury bonds and the expectation of further US interest rate hikes sent the dollar up in European trade on Tuesday. Comments from the president of the St. Louis Federal Reserve that the Fed will have to “step a little harder on the brake” if US economic data stays strong and that it is better to tighten monetary policy more now and then have to backtrack later, had an effect on the dollar’s value. Some analysts said that the comments might mean interest rates higher than the 5 percent most analysts now expect.

The US dollar was up 1.1 cent to $1.1908 in relation to the euro, while it gained 1.4 cents to $1.7354 against sterling and rose 1.2 centimes to SFr1.3100 versus the Swiss franc. The greenback was also up 0.3 cents to C$1.1434 against the Canadian dollar and ¥0.35 higher versus the Japanese yen, to ¥117.88.

Elsewhere, both the New Zealand and Australian dollars fell in relation to the US dollar. The Australian dollar dropped 0.5 cent to $0.7353 versus the greenback, while the New Zealand dollar hit an 18-month low against the US dollar, falling 0.8 cent to $0.6486 in relation to the US currency.

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