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Tuesday 02nd of December 2008
November 6, 2006

US Dollar stronger ahead of elections


by Elaine Frei

The US dollar was stronger on Monday ahead of Tuesday’s mid-term elections as it appeared that the Democratic party could take the majority from the Republicans in the House of Representatives or the Senate. Some analysts believe that the political stand-off that could follow such a development might benefit the dollar because President George Bush would be limited in his ability to make moves that could increase world tensions. In addition, the dollar was helped by last week’s positive unemployment figures, which are seen as decreasing the likelihood that the Federal Reserve will cut interest rates next year.

In mid-afternoon activity in New York, the greenback had added 0.1 percent versus the euro to $1.2700, while it gained 0.3 percent in relation to the Japanese yen to ¥118.40.

The Swiss franc was 0.2 percent lower versus the US dollar to SFr1.2565, while it dropped 0.1 percent to SFr1.5960 against the euro. The yen was also lower in relation to the euro, dropping 0.2 percent to ¥150.40.

Sterling was weaker on the announcement that manufacturing output was just steady in September, when a bit of a rise had been expected. The UK currency fell 0.2 percent in relation to the greenback to $1.8960, while it was 0.7 percent lower to £0.6700 versus the euro. The new data was not expected to stop the Bank of England from raising interest rates when it meets later in the week.

The Czech koruna was 0.4 percent higher versus the euro, to a record high of Kc27.920. Meanwhile, the Mexican peso was 0.3 percent lower to 10.824 pesos to the dollar after three bombings in separate locations in Mexico City.

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