Thursday July 10, 2008 - 10:33:35 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar supported by cheaper oil, BoE awaited
* Dollar index .DXY up 0.25 pct at 72.758
* Euro dented after French industrial output falls sharply
* Investors still wary as credit market concern resurfaces
* BoE in focus, expected to leave interest rates at 5 pct
(Changes byline, adds quotes, updates prices)
By Simon Falush
LONDON, July 10 (Reuters) - The dollar firmed against a
basket of major currencies on Thursday, supported by lower oil
prices, but investors remained wary of further credit market
turmoil after sharp losses in U.S. and European stock markets.
Crude prices stayed about $10 below a recent record high
despite inventories falling heavily and renewed geo-political
The euro was dented early after data showing French
industrial production dropped much more sharply than expected in
May, hit by downturns in the automobile and energy sectors
"The French manufacturing production data was disappointing
and the euro is falling against the dollar on any bad news,"
said John Hydeskov, senior FX analyst at Danske Markets in
"Rising oil prices are bad for the dollar but it (crude) has
taken a breather and this has tended to stop the dollar falling."
The dollar index, tracking the greenback's performance
against six currencies, rose 0.25 percent to 72.758 .DXY,
while the euro fell 0.3 percent to $1.5698 <EUR=>.
The dollar also gained 0.5 percent to 107.29 yen <JPY=>,
while the euro gained 0.2 percent to 168.40 yen <EURJPY=>.
Wariness remained over credit market turmoil however, with
Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), the two largest U.S.
mortgage funders, tumbling again on Wednesday on capital raising
BERNANKE, BoE EYED
Sterling was struggling against the dollar <GBP=> and euro
<EURGBP=> ahead of the Bank of England's interest rate decision
at 1100 GMT.
The BoE, like several other central banks, is facing the
dual pressures of rising inflation and slowing growth -- widely
expected to result in borrowing costs staying on hold at 5
Inflation is at its highest since the BoE was given the
power to set interest rates in 1997, and analysts are
increasingly upping bets on Britain entering a full-blown
recession because of a run of poor economic data.
"It may well be quite an intense debate at the BoE. But the
bottom line is that given, on the one hand weak growth and on
the other increasing inflation pressures, it leaves them in
somewhat of a bind," said head of currency research at Calyon,
Federal Reserve Chairman Ben Bernanke and Treasury Secretary
Henry Paulson are due to testify on regulatory restructuring
before the House Financial Services Committee later on Thursday.
The dollar was boosted when Bernanke said on Tuesday that he
was willing to keep the emergency lending facility for
investment banks open into 2009. Investors were waiting to see
if Bernanke would maintain a soothing tone.
(Additional reporting by Veronica Brown; Editing by Victoria
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