The greenback cracked against its European counterpart Wednesday, as investors braced for more U.S. interest rate cuts to prop up the sagging economy even as inflation rears its head.
After the euro broke through key technical levels late Tuesday, it continued to charge higher and set new historical records since the European currency began trading in January 1999. The 15-nation currency was last up 0.7% to $1.5117, after earlier rising as high as $1.5144...
The dollar index, which measures the greenback against a basket of six major currencies, was at 74.540, down from 74.712 late Tuesday. The index earlier hit a record low of 74.070.
Central bankers' comments yesterday fed the move.
Federal Reserve chief Ben Bernanke told Congress Wednesday that the Federal Open Market Committee will remain on course toward implementing additional interest-rate cuts, at least in the near term, although the journey has become more treacherous as prices are rising. Downside risks to economic growth, rather than inflation, still remain the key focus of Fed policymakers. Read the Fed...
Bernanke's remarks were in stark contrast with comments earlier Wednesday from Axel Weber, a hawkish European Central Bank Governing Council member and president of the German Bundesbank, which gave a tailwind to the united currency's updraft.
"Interest rate expectations for the euro zone don't reflect the monetary policy assessment of a central bank that is committed to price stability," Weber said, according to Dow Jones Newswires.
As did economic data.
The Commerce Department said new orders for durable goods fell 5.3% in January after a burst of orders in December, another sign that the economy is slowing. Economists surveyed by MarketWatch had anticipated a 5.1% drop. See Economic Report...
Other Commerce Department data showed sales of new homes nationwide fell by 2.8% in January despite a record drop in prices. See Economic Report.
Meanwhile, money supply growth in the euro area is slowing but gradually. Bloomberg reports:
Money-supply growth in the 15-nation euro region slowed less than economists forecast in January, limiting the European Central Bank's scope to cut interest rates.
M3 money supply, which the ECB uses as a gauge of future inflation, rose 11.5 percent from a year earlier, after gaining 11.6 percent in December, the Frankfurt-based central bank said today. Economists expected a rate of 11.3 percent, the median of 38 forecasts in a Bloomberg News survey showed.
Gold also rose yesterday, touching a record US$967.70 an ounce in the process. However, crude oil fell below US$100 a barrel after a government report showed a bigger-than-expected buildup in US crude inventories.
No comments:
Post a Comment