Chicago (AFX), 26.03.2004 - Euro fell against the dollar on Friday and then was in a limited range, since the resumption of speculation that the European Central Bank will lower interest rates.
According to traders, the report "Deutsche Bank", predictive repeatedly cutting rates of the CBR in the next three meetings, reduced demand for dollars. The next meeting of the Bank on 1 April.
Earlier this week, the dollar rose to a three-week peak against the euro after comments the Head of the European Central Bank Jean-Claude Trichet to encourage speculation about the possible cutting rates at its next meeting to be held next week. Lower rates reduce the attractiveness of the Euro for foreign investors.
In late New York trades euro remained unchanged at around $ 1.2123. Currency is in the range between $ 1.2072 and $ 1.2213.
According to "Deutsche Bank", the ECB is likely to reduce the rate by a quarter point to 1.75%. Euro started its decline this morning after a report pointing to stronger-than-expected data on consumer confidence in the U.S.. The final March University of Michigan index rose to 95.8 from February values - 94.4 and 94.1 in early March. According to the review of "CBS MarketWatch", economists expect the decline to 93.5.
European exporters and politicians convinced of the need to reduce interest rates to reverse the growth of the Euro against the dollar. A more expensive home currency hurts the competitiveness of exports - a trend that the Japanese government resisted making a record on the volume of foreign exchange intervention.
Initially, on Friday the dollar fell against major currencies, as the sustainability of American economic growth has been questioned after the U.S. data on costs.
Euro short ??????? boxes $ 1.22 after reports that the growth of real consumer spending in February was the slowest since September, after 0.2% of the increase in January. Real income (purified from inflation and taxes) increased by 0.2% in February to 0.6% after the first raise in January. The figures for income and expenditure reached below preliminary estimates.
"The dollar fell to a fixed return and close the positions before the weekend. As a result, the dollar was under pressure this morning," said analysts from the "Ruesch International" in Washington.
Euro rises on European bid on Friday, despite disappointing economic data in Germany. Some analysts said that the released report increases the chances of a quick reduction in interest rates in the euro area.
March Ifo index of business activity on Friday fell to 95.4 from 96.4 index in February. The decline expected by economists almost consistent with a fall to 95.7.
Ifo index showed that the polls, the behavior before and after the Madrid terrorist attacks, did not reveal significant differences with regard to the economic situation.
"The deterioration of the business climate in March can not simply be temporarily dismissed in this way. The economic recovery continues to suffer from weak domestic demand. Anxiety about the continuation of economic recovery are increasing, say analysts.
The dollar rose 0.4% against the Swiss franc to 1.2855 francs per dollar.
The dollar fell against the British pound by 0.5% to $ 1.8150 per pound.
The British pound fell sharply on Thursday after the Bank of England head Mervyn King suggested that was unlikely that the central bank will raise interest rates at a meeting early next month.
Against the yen the dollar fell 0.2% to 105.89 yen per dollar. The dollar fell to the fifth minimum - 105.56 yen earlier on Friday, but later played back.
The market suspects that the Bank of Japan began to intervene in the market and bought the dollar when it fell to 105.70 yen during the Asian trades.
"There is considerable pressure on the yen against the purchase of strong growth of shares in Tokyo," said a senior foreign exchange trader "Commerzbank AG" Riohay Muramatsu. "The Japanese economy is on the rise. I think that if it had not anticipated the intervention, the dollar would fall to 104 yen."
Economists expect that the key Tankan survey index in March increased to 10 from 7 in December. The index represents the percentage of companies reporting favorable business conditions minus the company, reporting adverse conditions. Review will be released on Thursday.
"Standard & Poor's" earlier this week raised its assessment of Japan's sovereign rating to "negative" to "stable", given the prospects for improving nominalnogoi real growth in Japan.
Muramatsu said that Japanese authorities will probably try to keep the dollar above the key level of 105 yen before the end of fiscal year for Japanese companies, which ends March 31.
Forex Magazine
based on fxstreet.com
based on fxstreet.com
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