U.S. Dollar sees Slight Drop against Euro

The U.S Dollar edged down slightly from a 1-month high versus the Euro today but remained fortified as investors are confident that the European Central Bank will have to reduce interest rates in the Euro Zone by week’s end.  According to most analysts, the ECB should reduce interest rates by 0.5% from the current 2.5% during Thursday’s meeting, in order to curb the potential protracted economic downturn in the Euro Zone.

On Monday, Standard & Poor, the international rating agency, warned Spain that its debt rating will be downgraded because of the global debt crisis.  According to a spokesperson from BBH Investment Services, the Euro’s environment is somewhat on the weak side, as such, there is no good reason for the currency to be favored.

On January 14, 2008, the Euro rose by 0.8% against the U.S. Dollar to $1.3279, after sliding to $1.3140, the lowest trade in one month.  Against the Japanese Yen, the Euro gained 1% and traded at 119.20 Yen.

Australian and New Zealand currencies crawled back from the 1-month lows that occurred on Tuesday after a sharp decline in risk appetite impacted negatively on the currencies.  The Australian Dollar climbed 1.9% against the U.S. Dollar today to $0.6772, while the New Zealand currency gained 0.8% against the U.S. Dollar trading at $0.5577.