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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (38046)	8/8/2008 10:22:58 AM
From: elmatador	Respond to of 218070

Investors Pile Back Into The Dollar LONDON - Currency traders were buying the dollar in droves on Friday, after the European Central Bank's warning about the euro zone economy raised concerns about slowing growth outside of the United States. The greenback hit a five-month high against the euro, on Friday; the 15-nation European currency traded at $1.5321, on Friday morning in London, down from 1.5408, late Thursday in New York. It came after the ECB's president, Jean Claude Trichet, talked up the euro zone growth problem on Thursday, after announcing that the central bank would keep euro zone interest rates on hold. (See "Trichet's Words Fail To Soothe Euro.") Soon after, many analysts began revising their bets that the central bank would raise interest rates later in the year to counter inflation. "There is a bullish dollar mood in the market at the moment," said Daragh Maher, a senior currency strategist at Calyon. "The ECB has supported that perspective by holding interest rates and by talking about signs of an economic downturn in Europe." "As the talk of more trouble ahead in the European economies grows, the mood drags the dollar in a positive position versus the euro," he added. European bonds fell on Friday morning. The 10-year German bund yielded 4.27%, in late morning trade in Frankfurt, up from 4.16%, late Thursday in New York. The yield on the two-year bund rose to 4.09%, from 4.06%. Gold fell 2.0%, and traded at $871.50 per ounce, down from $882.50, at its close on Thursday. The dollar has be sliding against the euro and other major currencies since the United States Federal Reserve began cutting interest rates in September last year. Since then the Fed has cut rates seven times, to 2.00%, in a bid to revitalize the American economy after the subprime mortgage crisis. Analysts say that it now looks like the dollar is set to rebound strongly in the coming months. (See "Greenback Falls Back.") "The economic problems in the United States have reached some sort of bottom," said Peter Scullion, vice president of the currency department of Nomura in London. "As Europe faces a couple of negative quarters and the rest of the world's economies weaken, the dollar will gain momentum." How long will the greenback stay robust? "These things tend to never operate in a straight line," said Maher. "Geopolitical risks in Iran could spike oil prices and send the dollar downward again." On July 15, the euro hit its all-time high against the dollar, peaking at $1.6038. Its previous historic high had been on April 22. (See "Euro Hits New Heights Against Plagued Dollar.")