Monday May 28, 2007 - 01:15:45 GMT
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FOREX NEWS-Dollar hovers near six-week high versus euro
FOREX-Dollar hovers near six-week high versus euro
Sun May 27, 2007 8:37 PM ET
TOKYO, May 28 (Reuters) - The dollar hovered near a six-week high against the euro and its strongest versus the yen in three months on Monday as traders determined that weak U.S. housing data late last week was not enough to warrant a cut in U.S. interest rates later in the year. The yen stayed under pressure as traders continued to shun the low-yielding currency after a rise in U.S. stock prices on Friday kept up demand for riskier yen-selling strategies like the carry trade.
Data on Friday showed that the pace of existing U.S. home sales in April was the weakest in nearly four years, but traders believed the data on its own may not prompt the Federal Reserve to cut rates from 5.25 percent given other firm data in past weeks.
"In the end, Friday's data was not enough to significantly raise the chance of a rate cut," said Nobuo Ibaraki, forex manager at Nomura Trust and Banking.
"We should see the dollar rise slowly this week."
Market participants expect trading to be quiet on Monday as markets in Britain and the United States will be closed for holidays.
The euro was unchanged at $1.3445 , pulling away from $1.3473 initially touched after Friday's housing figures and hovering within range of a six-week low around $1.3411 hit earlier that day.
The dollar was little changed at 121.80 yen after inching up to 121.89 yen on Friday.
The U.S. currency was not far from a four-year high of 122.20 yen touched in January, and some market participants said it was a matter of time before it breaches that level.
The euro was at 163.65 yen after hitting a record high of 164.02 yen last week.
The yen gained little support from an interview with Bank of Japan Governor Toshihiko Fukui in Japan's Asahi newspaper at the weekend, in which he said the central bank would look at land prices and currency movements, along with the economy, in deciding monetary policy.
Many in the market expect the central bank to raise rates by 25 basis points to 0.75 percent in August or later, and analysts said they would watch for a speech by Fukui later in the day to see if he offers any more clues to the BOJ's rate outlook.
The dollar remained weak against the Canadian dollar, trading around C$1.0795 after the Canadian currency jumped to a 29-1/2-year high of C$1.0776 on Friday due to higher oil prices and expectations that the Bank of Canada will issue a hawkish statement when it meets this week.
Investors are anticipating a series of important U.S. economic data this week, including a preliminary growth reading for the first quarter, as well as figures on monthly employment and manufacturing.
The U.S. Treasury is also due to release its twice-annual report on currencies this week, which investors will scrutinise to see if it calls on China to allow the yuan to further appreciate.
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