Euro hits 19-month high as dollar sinks
Euro hits 19-month high as dollar sinks
By Neil Dennis
Copyright The Financial Times Limited 2006
Published: November 24 2006 10:22 | Last updated: November 24 2006 10:22
The dollar sank across the board on Friday, with the euro hitting a 19-month high against the US currency on rising eurozone interest rate expectations, while comments from China also caused heavy selling.
The single currency rose as high as $1.3085 against the dollar, exceeding its previous high of the year by more than a cent.
Recent economic data has indicated continuing strength in the eurozone economy, while the US appears to be heading towards a slowdown. German consumer prices looked likely to add to this picture as six of the country’s states reported rising inflation trends.
Added to Thursday’s stronger-than-expected Ifo business confidence survey, interest rate expectations moved in favour of further gains for the euro.
“There is scope for further advances in the interest rate market in our view, with risks to the European Central Bank rate outlook on the upside,” said Henrik Gullberg at Calyon investment bank. “This should further the bullish euro environment.”
The losses were exacerbated by thin trading conditions, helping trigger stop-loss orders around the $1.30 level. By mid morning, the euro was 1 per cent higher against the dollar at $1.3070.
Wu Xiaoling, deputy governor of the People’s Bank of China, said following Thursday’s suspected central bank intervention in South Korea and India, that Asian foreign exchange reserves were at risk from the fall in the dollar.
“The exchange rate of the US dollar, which is the major reserve currency, is going lower, increasing the depreciation risk for east Asian reserve assets,” said Mr Wu.
The yen gained 0.5 per cent to Y115.68 against the dollar as Toshikatsu Fukuma, Bank of Japan board member, reiterated the central bank’s gradual and cautious stance on monetary tightening.
Sterling surged to its highest in a year-and-a-half, up 0.9 per cent to $1.9313.
By Neil Dennis
Copyright The Financial Times Limited 2006
Published: November 24 2006 10:22 | Last updated: November 24 2006 10:22
The dollar sank across the board on Friday, with the euro hitting a 19-month high against the US currency on rising eurozone interest rate expectations, while comments from China also caused heavy selling.
The single currency rose as high as $1.3085 against the dollar, exceeding its previous high of the year by more than a cent.
Recent economic data has indicated continuing strength in the eurozone economy, while the US appears to be heading towards a slowdown. German consumer prices looked likely to add to this picture as six of the country’s states reported rising inflation trends.
Added to Thursday’s stronger-than-expected Ifo business confidence survey, interest rate expectations moved in favour of further gains for the euro.
“There is scope for further advances in the interest rate market in our view, with risks to the European Central Bank rate outlook on the upside,” said Henrik Gullberg at Calyon investment bank. “This should further the bullish euro environment.”
The losses were exacerbated by thin trading conditions, helping trigger stop-loss orders around the $1.30 level. By mid morning, the euro was 1 per cent higher against the dollar at $1.3070.
Wu Xiaoling, deputy governor of the People’s Bank of China, said following Thursday’s suspected central bank intervention in South Korea and India, that Asian foreign exchange reserves were at risk from the fall in the dollar.
“The exchange rate of the US dollar, which is the major reserve currency, is going lower, increasing the depreciation risk for east Asian reserve assets,” said Mr Wu.
The yen gained 0.5 per cent to Y115.68 against the dollar as Toshikatsu Fukuma, Bank of Japan board member, reiterated the central bank’s gradual and cautious stance on monetary tightening.
Sterling surged to its highest in a year-and-a-half, up 0.9 per cent to $1.9313.
posted by Carlos T Mock @ 8:01 AM
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