U.S. Dollar Drops Slightly in Sydney - 19 June 2008

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.

High oil and commodity prices and renewed oil supply concerns is negatively impacting on the U.S. currency, even though investors do not foresee interest rate cuts any time soon.  Crude oil prices remained high, and yesterday closed at $136.68 a barrel, and according to experts, if the price of crude oil breaks the $140 per barrel level, the U.S. dollar will fall further.

According to an analyst at NAB Capital Markets, the U.S. Dollar will likely be “close to the bottom of its current trading range.”  While many analysts do not see the likelihood of an aggressive rate hike this year, the next possible thing the Federal Reserve will do is to increase its rate.  Analysts continue to trade on expectations of interest rate moves by the central banks, i.e. the Federal Reserve and European Central Bank, which are unclear and frequently changing.

On June 19, 2008 at 10:30 am (00:30 GMT) in Sydney, the U.S. Dollar traded at 107.66 Yen, compared to 107.90 Yen, while the Euro traded at $1.5564, compared to $1.5535 in late trading in New York.