Monday July 7, 2008 - 10:53:55 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dlr at 1-wk highs vs majors as oil retreats
* Dollar index up 0.4 pct at 73.008
* Retreating oil price helps boost dollar as G8 meets
* Less hawkish ECB still weighing on euro
(Updates prices, adds comments, changes byline)
By Ian Chua
LONDON, July 7 (Reuters) - The dollar hit 1-1/2 week highs
against a basket of major currencies on Monday driven in part by
speculation that comments from G8 officials could push oil
prices further away from last week's record highs.
The dollar tends to benefit from lower oil prices, which
have fallen more than $3 from a peak of $145.85 CLc1, because
the United States is such a heavy energy consumer.
Data showing an unexpected drop in euro zone investor morale
in July to its lowest level since June 2005 did no favours for
the euro, which was already hit by diminished expectations of
further European Central Bank rate hikes after last Thursday's
25 basis point move to 4.25 percent.
German industrial output unexpectedly declined in May,
further darkening the outlook for the euro zone. [ID:nL0712060]
"It's a continuation of the momentum that was in the market
since the ECB announcement last Thursday. I'd certainly be of
the view that the move may be a little overdone ... the U.S.
(economy) is still in a lot of trouble," said Derek Halpenny,
senior currency economist at BTM-UFJ.
"I'm not bullish on the euro because Europe is avoiding a
slow down. It's very clear that global growth is slowing ... but
FX is all about relative differences, and on a relative basis, I
still think the euro zone looks a lot better particularly
against the United States and also Japan."
The dollar index .DXY climbed 0.4 percent to 73.008 after
earlier peaking at 73.151, a level last seen on June 25. The
U.S. unit pushed 0.7 percent higher to 107.52 yen <JPY=>.
The euro eased 0.3 percent to $1.5652 <EUR=> by 1034 GMT,
nearly three cents below two-month highs seen on Thursday before
the ECB decision.
FURTHER EURO WEAKNESS?
After the widely expected rate hike on Thursday, ECB
President Jean-Claude Trichet said he had no bias on further
policy moves, prompting markets to trim bets for more policy
Near-term, analysts said the euro could see further
"Now that further rate hikes from the ECB appear to be very
much in doubt, the greenback's strength is likely to come not so
much from any shockingly positive U.S. economic news, but rather
from further speculative unwinding of euro long positions," said
Boris Schlossberg, senior currency strategist at FXCM.
"That unwinding may continue this week possibly testing the
One of the major movers on the day was sterling <GBP=>,
which fell 0.7 percent to $1.9680 after news that British
industrial output fell much more than expected in May,
highlighting the twin threats of a sharply slowing economy and
rising inflation facing the central bank.
No major U.S. data is due on Monday, but San Francisco Fed
President Janet Yellen will speak later in the day.
Fed Chairman Ben Bernanke will speak at a Federal Deposit
Insurance Corp forum on Tuesday, and give testimony before the
House Financial Services committee on Thursday, although he is
expected to confine his comments to financial market regulation.
Investors have started to take the view that risks to growth
and concern about the financial sector will prevent the Fed from
raising the fed funds rate from 2 percent for now.
However, markets are still pricing in a quarter-point rise
before the end of the year FEDWATCH.
(Additional reporting by Toni Vorobyova; Editing by Gerrard
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."