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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (44121)	4/18/2007 12:22:50 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69747

Dollar slides to 26-year low against pound Euro approaches record as dollar continues to decline PrintE-mailDisable live quotesRSSDigg itDel.icio.usBy Wanfeng Zhou & Simon Kennedy, MarketWatch Last Update: 11:32 AM ET Apr 18, 2007 NEW YORK (MarketWatch) -- The dollar extended its slide against other major currencies on Wednesday, hitting a 26-year low against the British pound and approaching an all-time low against the euro, after recent U.S. inflation numbers damped expectations that the Federal Reserve would increase interest rates. The pound climbed as high as $2.0133, its highest level since 1981, after the minutes of the latest Bank of England meeting showed its Monetary Policy Committee voted 7 to 2 in favor of holding interest rates at 5.25% in April. The two dissenters favored hiking rates. "'They don't like the U.S. dollar anywhere and it is unanimously so," said Dennis Gartman of the Gartman Letter. "Simply put, the market is now convinced that the future of the U.S. economy is one of relative weakness, while that of Europe is one of strength." In New York trading, the euro stood at $1.3579, compared with $1.3565 late Tuesday. It reached a high of $1.3614 earlier in the session, the loftiest level since January 2005. The dollar is within striking distance of its all-time low against the euro, $1.3666, reached in December 2004. The British pound traded at $2.0054 vs. $2.0051, after earlier touching $2.0133, the highest level since 1981. The dollar changed hands at 1.2051 Swiss francs, compared with 1.2088 francs. The dollar was last quoted at 118.24 yen, compared with 118.95 yen. The euro fetched 160.55 yen, compared with 161.35 yen. See live currency rates. On Tuesday, the dollar dropped after a Labor Department report showed U.S. core consumer prices rose less than forecast last month. "The Fed shall err upon the side of either holding rates steady or erring toward weaker rates, while the [European Central Bank] shall err toward steady-to-tighter rates moving forward," Gartman said. "Until that consensus outlook is made to change... and we see no reason at the moment to believe that it can be or shall be for the very long foreseeable future ... the trend of the U.S. dollar shall be downward; the trend of the euro and sterling shall be upward," he said. Bank of England The monetary-policy committee of the Bank of England voted 7 to 2 to keep U.K. interest rates on hold when it met in early April, minutes from the meeting showed Wednesday. Two members, Tim Besley and Andrew Sentence, voted against keeping rates on hold, preferring an increase in the bank rate of 0.25 percentage point. See separate story. Better-than-expected employment and wage data further fueled speculation that the BoE will hike rates more aggressively than markets expected. U.K. average earnings rose 4.6% in the three months to February, above expectations for a 4.3% rise. A separate report showed U.K. claimant count dropped more than expected. The data followed Tuesday's announcement that inflation had jumped to 3.1% in March -- the highest level in a decade -- which raised expectations that the bank will have to hike interest rates more than once this year. "The pound was once again the lead story in the currency markets tonight as U.K. data continued to impress. ... [T]hat sparked speculation of possibly two rather than just one near- term rate hikes from the BoE," said Boris Schlossberg, senior currency strategist at DailyFX.com. The latest economic figures "confirmed widespread price pressures in the U.K. economy at the producer, consumer and wage level." Dollar nears record low The dollar came under pressure across the board on Wednesday, extending its recent declines on expectations that the interest-rate differential between the U.S. and other parts of the world will continue to narrow. "There has been a corrosive force on the dollar against the euro: interest-rate differentials. The premium offered by the U.S. continues to narrow," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. "With U.S. rates now projected to be flat and U.S. economic data continuing to register lackluster performance, the greenback is in a deep funk and it is difficult to see what will change market sentiment save for a bout of some profit-taking," said DailyFX.com's Schlossberg. David Brown, economist at Bear Stearns, said that while the dollar is within 0.5% of its lowest-ever level against a basket of major currencies, "nobody is panicking." "Despite the fact the dollar is languishing at such low levels, the market does not seem to think the greenback is standing at the edge of a cliff," he said. In other trading, the New Zealand dollar hit a 22-year high versus the dollar before pulling back. A report showed consumer inflation remained above the bank's projection, boosting expectations that the Reserve Bank of New Zealand will lift rates later this month. Wanfeng Zhou is a markets reporter in New York.