Wednesday March 9, 2005 - 15:20:28 GMT
Share This Story
ACM REFCO - www.ac-markets.com
FX Daily Technical Strategy
Dollar hits 2 month low versus euro before US trade data
The dollar hit a two-month low against the euro on Wednesday, within three cents of the historic low set in December, as investors braced for potentially dollar-negative U.S. trade data on Friday.
In a session with no key U.S. data, investors were selling dollars in anticipation that the data would put the focus back onto the huge U.S. current account deficit a key factor behind the dollar's three-year decline.
Friday's U.S. trade data is expected to show the deficit widened to $56.50 billion in January from $56.40 billion in December, moving closer to record levels hit late last year.
By 12h30 GMT, the dollar had hit its lowest level since January 4 against the euro at $1.3389, down around a third of a percent on the day. It hit a record low against the euro at the end of December at $1.3667.
Against the yen, the dollar fell two thirds of a percent on the day to a two-week low below 103.83 yen.
The latest bout of dollar selling also stemmed from a spike in commodity and oil prices, fuelling inflows into exporters of such products such as Canada and Australia.
Oil prices rose towards $55 a barrel on Wednesday, just shy of a record high, while the Reuters CRB Index of 17 commodity futures hit a 24-year high the previous day.
The Australian dollar stood at US$0.7980, having hit a one-year high of US$0.7990 on Tuesday. The Canadian dollar hit a two-month high of C$1.2053 per dollar.
The kiwi retreated from Tuesday's 22-1/2 year high above US$0.74 after New Zealand Finance Minister Michael Cullen said the country's strong currency was a real concern.
The immediate focus for the kiwi is a policy statement from the Reserve Bank of New Zealand due at 20h00 GMT on Wednesday, with some investors expecting a rate rise from 6.5 percent already the highest in the developed world.
Some traders said the euro was helped by talk the European Central Bank was leaning towards raising interest rates.
ECB President Jean-Claude Trichet said on Wednesday the bank stands ready to raise interest rates to prevent inflationary pressures building whenever that proves necessary.
That followed comments from ECB governing council member Nout Wellink on Tuesday that there would come a time when the ECB would have to act against excess money supply in the euro zone.
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."