Tuesday May 22, 2007 - 10:42:51 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dollar near six-wk peak vs euro, unruffled by ZEW
FOREX-Dollar near six-wk peak vs euro, unruffled by ZEW
Tue May 22, 2007 6:22 AM ET
(Recasts, changes byline, adds quotes, updates prices)
By Veronica Brown
LONDON, May 22 (Reuters) - The dollar edged up against major currencies on Tuesday, hovering near six-week highs against the euro and a three-month peak versus the yen as expectations for the Federal Reserve to cut interest rates later this year eased.
Dollar-supportive sentiment from some recent U.S. data, ahead of U.S.-China economic talks later on Tuesday, offset any positive gloss for the euro from a robust reading of investor expectations from Germany's ZEW investor sentiment index.
The yen rebounded briefly against the dollar and euro after a media report cited a Bank of Japan official suggesting the BOJ may raise interest rates sooner than many were anticipating.
The ZEW index of German investor sentiment rose to 24.0 in May from 16.5 in April. A separate gauge of current conditions for Germany advanced to 88.0 from 76.9 in April. The consensus forecast was for a reading of 79.0.
"We've seen over the past couple of days that dollar sentiment has gotten a little bit better. The ECB has been unwilling to commit to anything beyond a June rate hike ... markets need something beyond that," said Teis Knuthsen, head of FX research at Danske markets.
By 0957 GMT, the euro was down 0.15 percent on the day against the dollar at $1.3445 -- down almost 25 ticks from levels seen just before the ZEW data and near Monday's six week-low at $1.3435.
The dollar was steady against the yen at 121.47 yen , while the the euro was down 0.1 percent at 163.38 yen . Against a basket of major currencies, the dollar was up on the day at 82.430 <=USD> having hit a six-week high of 82.510 on Monday.
US-CHINA TALKS EYED
Solid economic data last week offered the U.S. currency a respite from a wave of selling that pushed it to a record low versus the euro last month, and chances that the Fed will not cut rates from 5.25 percent in the coming months have prompted some investors to pare back short dollar positions.
"The dollar has staged a fairly impressive recovery in recent weeks and a lot of this is revolving around the fact that the market believes the hawkish stance at the Fed is going to hang around a lot longer than had been previously thought," CMC markets said in a note to clients.
Financial markets are pretty evenly split on whether the Fed will deliver a quarter-point rate cut this year. In mid-March, however, a full 50 basis points of easing by the end of the year was discounted.
Currency movements were limited before two days of U.S.-China economic talks set to start later in the day as traders wanted to see if Washington would keep up pressure on Beijing to let the yuan appreciate more.
On Friday, China's central bank widened the daily band in which it allows its currency to trade, in addition to raising both its lending and bank deposit rates.
Washington has long complained that a weak yuan gives China an unfair trade advantage.
The BOJ released the minutes of its April 9-10 policy meeting at which it held its overnight rate at 0.5 percent in line with market expectations. They showed many board members said they need to watch asset prices and their impact on the economy closely.
BOJ board member Atsushi Mizuno indicated the central bank will discuss as early as July whether to raise interest rates from the current ultra-low 0.5 percent, Japanese news agency Jiji reported.
Â© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
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."