Dollar hovers close to record low against euro
Thursday, 8 November 2007
TOKYO, Nov 7 (AFP): The dollar languished close to a record low against the euro in Asian trade today as markets speculated about the chances of another US interest rate cut, dealers said.
They said the greenback continued to be pressured by fears of more bad news from the major banks on their exposure to the US subprime loan crisis.
The euro was at 1.4562 dollars in Tokyo midday trade, close to a record high of 1.4570 reached in late New York trade Yesterday.
The dollar rose to 114.70 yen, up from 114.53 in late US trade, while the euro was steady at 167.01.
The greenback was also at a fresh record low against a basket of major currencies including the British pound, which hovered close to a 26-year high against the greenback, dealers said.
"The US dollar's downtrend continues and while the markets look for more Fed easing while other central banks in the world look to tighten it is difficult to see the current trend ceasing anytime soon," said John Noonan, a currency analyst at Thomson IFR.
Speculation is mounting that the Fed may cut interest rates again when it next meets in early December in an effort to keep the US economy on track.
The Fed last week cut its base federal funds rate by a quarter-point to 4.50 per cent to ease tight credit stemming from a housing slump.
The dollar continued to be squeezed by investor fears that the fallout from recent US mortgage and credit market problems has yet to run its course, dealers said.
Lower US yields have dampened demand for dollar assets as investors chase higher returns elsewhere.
The Reserve Bank of Australia Wednesday raised its benchmark rate by 25 basis points to 6.75 per cent, increasing the currency's yield advantage.
"The dollar was weaker ... as investors focused on diminishing yields on offer in the US as the Fed needs to keep cutting interest rates in response to the sub-prime fallout," noted NAB Capital strategist John Kyriakopoulos.
The European Central Bank also meets on interest rates this week and, while no move is expected for now, markets will be listening closely to comments from ECB head Jean-Claude Trichet Thursday for clues on the policy outlook.
Any strong hint that another rate hike is on the cards would be likely to support the euro, analysts said.
"The euro-dollar trade is now in unchartered territory with only psychological barriers such as 1.5000 providing resistance," said Kyriakopoulos.
They said the greenback continued to be pressured by fears of more bad news from the major banks on their exposure to the US subprime loan crisis.
The euro was at 1.4562 dollars in Tokyo midday trade, close to a record high of 1.4570 reached in late New York trade Yesterday.
The dollar rose to 114.70 yen, up from 114.53 in late US trade, while the euro was steady at 167.01.
The greenback was also at a fresh record low against a basket of major currencies including the British pound, which hovered close to a 26-year high against the greenback, dealers said.
"The US dollar's downtrend continues and while the markets look for more Fed easing while other central banks in the world look to tighten it is difficult to see the current trend ceasing anytime soon," said John Noonan, a currency analyst at Thomson IFR.
Speculation is mounting that the Fed may cut interest rates again when it next meets in early December in an effort to keep the US economy on track.
The Fed last week cut its base federal funds rate by a quarter-point to 4.50 per cent to ease tight credit stemming from a housing slump.
The dollar continued to be squeezed by investor fears that the fallout from recent US mortgage and credit market problems has yet to run its course, dealers said.
Lower US yields have dampened demand for dollar assets as investors chase higher returns elsewhere.
The Reserve Bank of Australia Wednesday raised its benchmark rate by 25 basis points to 6.75 per cent, increasing the currency's yield advantage.
"The dollar was weaker ... as investors focused on diminishing yields on offer in the US as the Fed needs to keep cutting interest rates in response to the sub-prime fallout," noted NAB Capital strategist John Kyriakopoulos.
The European Central Bank also meets on interest rates this week and, while no move is expected for now, markets will be listening closely to comments from ECB head Jean-Claude Trichet Thursday for clues on the policy outlook.
Any strong hint that another rate hike is on the cards would be likely to support the euro, analysts said.
"The euro-dollar trade is now in unchartered territory with only psychological barriers such as 1.5000 providing resistance," said Kyriakopoulos.