U.S. Dollar Steady against Major Currencies - 2 May 2008

The U.S. Dollar remained steady against major currencies following a 5-week high versus the Euro overnight, on speculation that the Federal Reserve will end its rate cuts soon.

On May 1, 2008, at 10:55 am (00:55 GMT), the U.S. Dollar traded at 104.60 Yen, compared to 104.44 Yen while the Euro traded at $1.5475 compared to $1.5431 in Thursday trading in New York.

Traders are on hold and anxiously waiting for today’s press release of April U.S. non-farm payroll figures.  However, the Federal Reserve’s stance on inflation, as highlighted in the Federal Open Market Committee’s press release on Wednesday, has given a firmer tone to the U.S. currency.  According to most analysts, the Federal Reserve has signalled a pause in interest rate cuts, and as a result, the U.S. Dollar will continue to firm up against major currencies.

The U.S. Manufacturing Activity Index released yesterday was better than expected.  The index was steady at 48.6 for April, which is better than the 48.0 predicted by analysts.  It should be noted that an index of 50 and below signals a continued contraction in the manufacturing sector.