Market News

The U.S. Dollar lost against the Euro in early trading in London, as a result of skepticism among traders as to whether or not the U.S. Dollar’s Wednesday gains can be sustained amid continued concerns for the financial sector.

The U.S. Dollar stabilized at the news of measures currently being undertaken by the U.S. treasury and Federal Reserve to calm the financial market, coupled with a sharp decrease in oil prices.

In early morning trading today in Sydney, the U.S. Dollar remained mixed versus major currencies prior to the release of data on U.S. producer prices. Economists expect this data to show that inflationary pressures persist in the United States economy. Experts are divided about the Fed’s resolve to combat inflationary pressures at the time when the economy is almost, if not, in recession.

The U.S. Dollar edged slightly against major currencies following the announcement of the U.S. Government-Sponsored Enterprises “GSE” rescue package for Fannie Mae and Freddie Mac. On Monday, the U.S. Treasury announced an emergency plan intended to restore confidence in the financial market, as investors are beginning to question the financial health of the two largest mortgage lenders in the United States which, together, control 50% of all mortgage lending activities in the U.S. The rescue plan calls for the provision of direct credit lines by the Treasury and the possibility of the Treasury buying their shares. In addition, the Federal Reserve will make available to the two institutions, access to the direct lending window, which is normally available only to financial institutions.

The decline by the U.S. dollar was prevented from falling further by a recovery in the European and U.S. equity markets, coupled with slightly improved sentiment in the financial sector.

The U.S. Dollar firmed versus major currencies today due to lower crude oil prices. Crude oil prices fell by almost $10 from a recent record high even though crude oil inventories fell sharply, and renewed tension in the Middle East. However, investors are concerned about further credit market upheaval following stock market losses in Europe and the United States.

The surface to surface missile test by Iran did not significantly impact the U.S. Currency as expected by analysts, due to the tension sin the region. The Euro edged higher to $1.5723 compared to $1.5748, while the U.S. Dollar dropped just above 107 Yen, compared to 107.53 earlier.

The U.S. Dollar gained against the Japanese yen on Monday because stocks in the U.S. recouped some losses even though renewed concerns that some financial institutions will be compelled to write down additional mortgage related assets. However, the U.S. Dollar eased versus the Euro as concerns over the decline in crude oil prices waned and the unexpected decline in the Euro-zone investor morale. The Japanese Yen closed at 107.18, down .3% in late New York trading, and the Euro closed at $1.5720, up .1% in late New York trading.

The U.S. Dollar edged up slightly against major currencies as investors speculate that statements made by officials of the G8 could cause oil prices to fall. The Dollar also benefited from better than expected U.S. job data and reduced expectations that the European Central Bank will further increase interest rates after last week’s increase of 25 basis points.

The U.S. Dollar dropped further against the Euro today in response to statement made by the Federal Reserve after the FOMC meeting, which suggests that the Federal Reserve may not aggressively hike interest rates towards year end. The FOMC decided to keep its benchmark rate unchanged at 2%, while acknowledging the presence of inflationary pressures in the economy.

Investors are waiting for the outcome of the FOMC meeting and the accompanying statement to assess the direction of interest rates. Consequently, the U.S. dollar traded in tight ranges in Tokyo on Wednesday against major currencies.

The U.S. Dollar traded mixed today against major currencies as the market’s attention is squarely fixed on the Federal Open Market Committee (FOMC) meeting, which will take place tomorrow.

The U.S. Dollar traded within narrow ranges against major currencies on Friday in Tokyo as investors are waiting for new leads prior to the release of the U.S. economic data today and the Federal Open Market Committee (FOMC) meeting which starts next week, Tuesday.

The U.S. Dollar again fell slightly against major currencies in mid-morning trading today in Sydney as investors’ are beginning to feel that the Federal Reserve will not hike interest rates this year.

In mid-morning trading today in Sydney, the U.S. Dollar traded mixed against major currencies as the tussle continues with respect to which of the central banks, i.e. the U.S. Federal Reserve or the European Central Bank, will aggressively fight inflation. Investors in the currency market remain divided on the short term direction of the U.S. currency following expectations that the central banks are not likely to hike rates in the near term.