Post by Sunshine on Apr 21, 2007 12:58:45 GMT -5
NEW YORK (MarketWatch) -- The dollar continued its slide against major currencies Wednesday, hitting a 26-year low against the British pound, and approaching an all-time low against the euro, after the latest U.S. inflation numbers dampened expectations of a rate hike by the Federal Reserve.
At the same time, the pound climbed as high as $2.0133, its highest level since 1981, after the minutes of the latest Bank of England meeting showed its Monetary Policy Committee voted 7 to 2 in favor of holding interest rates at 5.25% in April, with two members dissenting in favor of hiking rates. Better-than-expected employment and wage data further fueled speculation that the BoE will hike rates more aggressively than markets expected.
"The move against the U.S. dollar has gained momentum. It seems to be just as much the case of a strong euro and strong pound as it is a weak dollar story," said Marc Chandler, global head of currency strategist at Brown Brothers Harriman. "There has been a corrosive force on the dollar against the euro: Interest rate differentials. The premium offered by the U.S. continues to narrow."
In early New York trading, the euro stood at $1.3575, compared with $1.3565. It reached a high of $1.3614 earlier in the session, the loftiest level since January 2005. The dollar was last quoted at 118.34 yen, compared with 118.95 yen late Tuesday.
The British pound traded at $2.0043 vs. $2.0051, after earlier touching $2.0133, the highest level since September 1992.
The dollar changed hands at 1.2055 Swiss francs, compared with 1.2088 francs.
The euro fetched 160.68 yen, compared with 161.35 yen. See live currency rates.
BoE minutes
The monetary-policy committee of the Bank of England voted by a margin of seven to two to keep U.K. interest rates on hold when it met in early April, minutes from the meeting showed Wednesday.
Two members, Tim Besley and Andrew Sentance voted against keeping rates on hold, preferring an increase in bank rate of a quarter of a percentage point. See separate story.
Sterling also rose after data showed average earnings rose 4.6% in the three months to February, above expectations for a 4.3% rise. Meanwhile, U.K. claimant count dropped more than expected.
The latest data followed Tuesday's announcement that inflation had jumped to 3.1% in March -- the highest level in a decade -- which raised expectations that the bank will have to hike interest rates more than once this year.
"The pound was once again the lead story in the currency markets tonight as U.K. data continued to impress...that sparked speculation of possibly two rather than just one near term rate hikes from the BoE," said Boris Schlossberg, senior currency strategist at DailyFX.com. The latest data "confirmed widespread price pressures in the U.K. economy at the producer, consumer and wage level."
Dollar nears record low
The euro is edging towards its all-time high against the dollar of $1.3666, which it reached in December 2004.
The euro's gains added to its Tuesday advance, when it got a boost from a higher-than-expected reading of German economic sentiment.
The dollar also hit a 22-year low against the New Zealand dollar.
"'They' don't like the U.S. dollar anywhere and it is unanimously so," said Dennis Gartman of the Gartman Letter.
"Simply put, the market is now convinced that the future of the U.S. economy is one of relative weakness, while that of Europe is one of strength," he said. "Until that consensus outlook is made to change... and we see no reason at the moment to believe that it can be or shall be for the very long foreseeable future... the trend of the U.S. dollar shall be downward; the trend of the euro and Sterling shall be upward."
whats ya'lls take on this?.what does it mean for the US
At the same time, the pound climbed as high as $2.0133, its highest level since 1981, after the minutes of the latest Bank of England meeting showed its Monetary Policy Committee voted 7 to 2 in favor of holding interest rates at 5.25% in April, with two members dissenting in favor of hiking rates. Better-than-expected employment and wage data further fueled speculation that the BoE will hike rates more aggressively than markets expected.
"The move against the U.S. dollar has gained momentum. It seems to be just as much the case of a strong euro and strong pound as it is a weak dollar story," said Marc Chandler, global head of currency strategist at Brown Brothers Harriman. "There has been a corrosive force on the dollar against the euro: Interest rate differentials. The premium offered by the U.S. continues to narrow."
In early New York trading, the euro stood at $1.3575, compared with $1.3565. It reached a high of $1.3614 earlier in the session, the loftiest level since January 2005. The dollar was last quoted at 118.34 yen, compared with 118.95 yen late Tuesday.
The British pound traded at $2.0043 vs. $2.0051, after earlier touching $2.0133, the highest level since September 1992.
The dollar changed hands at 1.2055 Swiss francs, compared with 1.2088 francs.
The euro fetched 160.68 yen, compared with 161.35 yen. See live currency rates.
BoE minutes
The monetary-policy committee of the Bank of England voted by a margin of seven to two to keep U.K. interest rates on hold when it met in early April, minutes from the meeting showed Wednesday.
Two members, Tim Besley and Andrew Sentance voted against keeping rates on hold, preferring an increase in bank rate of a quarter of a percentage point. See separate story.
Sterling also rose after data showed average earnings rose 4.6% in the three months to February, above expectations for a 4.3% rise. Meanwhile, U.K. claimant count dropped more than expected.
The latest data followed Tuesday's announcement that inflation had jumped to 3.1% in March -- the highest level in a decade -- which raised expectations that the bank will have to hike interest rates more than once this year.
"The pound was once again the lead story in the currency markets tonight as U.K. data continued to impress...that sparked speculation of possibly two rather than just one near term rate hikes from the BoE," said Boris Schlossberg, senior currency strategist at DailyFX.com. The latest data "confirmed widespread price pressures in the U.K. economy at the producer, consumer and wage level."
Dollar nears record low
The euro is edging towards its all-time high against the dollar of $1.3666, which it reached in December 2004.
The euro's gains added to its Tuesday advance, when it got a boost from a higher-than-expected reading of German economic sentiment.
The dollar also hit a 22-year low against the New Zealand dollar.
"'They' don't like the U.S. dollar anywhere and it is unanimously so," said Dennis Gartman of the Gartman Letter.
"Simply put, the market is now convinced that the future of the U.S. economy is one of relative weakness, while that of Europe is one of strength," he said. "Until that consensus outlook is made to change... and we see no reason at the moment to believe that it can be or shall be for the very long foreseeable future... the trend of the U.S. dollar shall be downward; the trend of the euro and Sterling shall be upward."
whats ya'lls take on this?.what does it mean for the US