Friday, November 24, 2006

Forex News: Dollar Reaches 1.31 vs Euro

Forex News

The dollar slid to break 1.30 level versus the euro for the first time since April 2005 on Friday and is testing 1.31 now.

The dramatic decline of the dollar was a result of accumulation of recent weak U.S. economic data. The greenback started to weaken since Wednesday after economic advisers to President George Bush cut their forecasts for economic growth next year as the housing market is cooling down. A government report released this Wednesday showed U.S. consumer sentiment also turned down. The Fed has already done with rate hike and the market is looking a rate cut some time next year.

Compared with the Fed, the European Central Bank is widely expected to raise interest rates by another 25 basis point to 3.5% by March 2007. Several ECB officials, including President Trichet, Miguel Angel Fernandez Ordonez, and Klaus Liebscher, said this week that the central bank should keep vigilant on inflation.


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