American Optimism Pushes Dollar Up
By Shams Hamid on Oct 04, 2010 with Comments 0
The dollar climbed against the euro on Monday recuperating prior losses as traders’ slash bets the currency will decline based on speculations that Federal Reserve could further ease U.S. monetary policy.
A pending homes sales index report and reading for U.S. factory orders due today will furnish more economic insights for investors. A considerable number of investors are predicting further Federal Reserve stimulus.
The dollar lingered around a fifteen year low against the yen stimulating speculations that Japan will relax its monetary policy further this week. Against the Swiss franc dollar plunged to 0.9705 francs, its lowest in two and a half years, before recovering to 0.9737 francs. Experts expect the dollar’s downward trend to continue despite Monday’s gains.
The euro fell against the dollar on Monday as more detailed news became available of the extent of Ireland’s budget deficit and prediction of no growth for this year, and a hostile takeover bid for a U.S. pharmaceutical company. Also, investors and speculators cut down long positions in the single currency after it climbed a six and a half month high above $1.38 earlier in the session.
Omer Esiner, chiefmarket analyst at Commonwealth Foreign Exchange Inc inWashington said, “The euro has come a very long way in a very short period of time and certainly Ireland and the peripheral euro zone country issues have not gone away”. When those issues “come back in the spotlight, they are used to take some profits on the euro.”
Speculations are that the the Bank of Japan will announce more stimulus after its two-day policy-setting meeting concluding on Tuesday.
Hideaki Inoue, Chief manager of forex trading at Mitsubishi UFJ Trust and Banking said, “The yen may shoot up if the BOJ’s decision meets the market’s mainstream forecast”.
Early Monday morning the euro stood at $1.3705 from $1.3784, the dollar was at Y83.29 from Y83.32, while the euro was at Y114.14 from Y114.81. The U.K. pound was at $1.5823 from $1.5841.
