U.S. Dollar Firms against Major Currencies
Today the U.S. Dollar traded firmer versus major currencies, adding to gains made overnight on growing speculation that the interest rate cutting cycle by the Federal Reserve Bank may be coming to an end.
On May 8, 2008 at 10:30 am (00:30 GMT) in Sydney, the U.S. Dollar traded at 104.80 Yen, compared to 104.62 Yen while the Euro traded at $1.5349 compared to $1.5389 in late trade in New York.
Last quarter’s U.S. productivity data, which was better than expected, and hawkish comments by Thomas Koenig, President of Kansas City Federal Reserve supported the U.S. Dollar against major currencies. According to Koenig, the U.S. economy will recover later this year, and the persistent inflation outlook meant the Federal Reserve will make policy decisions to curb inflation when the need arises.
Furthermore, weaker than expected economic data from the Euro zone and the U.K. helped boost the U.S. Dollar. The Euro fell to $1.5367 from $1.5500 due to unexpected drop in retail sales in the Euro zones and factory orders in Germany during March.
In March, the U.K. industrial production, which fell more than expected, pushed the Pound Sterling to a 12 year low of $1.9500.
Analysts are saying that a drop in metal and gold prices and the stronger U.S. Dollar, together with deteriorating risk appetite of investors continue to put pressure on the Australian Dollar.