U.S. Dollar Gains Ground Against the Euro in Early Asian Trading
On Monday, March 24, 2008 in Asia, the U.S. Dollar gained on the Euro after hitting record lows last week. Due to the Easter Holiday in the United States and Europe, trading activities was very light in Asia as most investors are waiting for the U.S. market to resume trading later today.
The recovery of the U.S. Dollar appears to be the result of the Federal Reserve’s efforts to ease the liquidity crisis. Investors are selling commodities such as gold and crude oil and are buying back the U.S. Dollar before the March 31 quarter end. As a result, the Euro fell from $1.5445 to $1.5360.
It has been rumored that both the U.S. Federal Reserve and Bank of England are contemplating the possibility of purchasing mortgage backed securities with public funds. Although such a move has been denied by the authorities, if it is implemented, it will restore confidence in the financial market.
Data released today showed that, during the first quarter of this year, Japanese manufacturers’ had little confidence, as business activities fell to a new low. With this news, investors do not expect the Bank of Japan to raise the interest rate. Japanese exporters continue to worry about the strength of the Yen, which is eroding the profit of most of the large companies.