Dollar falls amongst further tension with China
The Dollar fell sharply against the Pound and the euro yesterday amongst further tensions between the US and China. The Dollar fell around 0.6 per cent against the euro to $1.3439 and by roughly the same margin against the pound to $1.9740.
The intensified tension followed China’s stance to decline an invitation to take part in the G7 talks which are to be held in the US. This seems to be tit-for-tat retaliation against the Americans complaint to the World Trade Organization over arguments about intellectual property rights and China’s restrictions on foreign book and film sales.
Although we are still far away from the dollar high this year against the pound, the added pressure on the US economy, despite strong non-farm pay roll figures last week, has pushed £/$ further in that direction.
An expected result in Europe is rate changes by the ECB and BoE but the question is how soon and in what direction? The consensus in the UK is that there may be a rate increase as soon as May with recent economic data showing UK inflation edging up and retail sales still growing strongly.
The ECB meets this Thursday to discuss the state of the European economy and with the hawks circling over the past few weeks with one hawk, Austria’s Libscher, citing the reason that “everything that is necessary needs to be done to keep inflationary expectations where the are”, they could possibly follow in the same direction.
As mentioned in yesterdays Wise Money report the commodities market may be a key area to keep an eye on this year with oil and gas key components in every economy especially those that are highly dependant and high consumers like the US. An aggressive stance by President Hugo Chaves of Venezuela to take control of several major oil projects owned by American and European companies by May 1st will add further tension, just as it has seemed to ease off after the UK-Iran issue.
Commodity linked currencies have done well this year for instance; the Australian dollar hit a 16-year high against the dollar on Tuesday. Brazil's real touched a six-year high versus the dollar on Monday and the Canadian dollar recently rose to its highest level since December 2006.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
The intensified tension followed China’s stance to decline an invitation to take part in the G7 talks which are to be held in the US. This seems to be tit-for-tat retaliation against the Americans complaint to the World Trade Organization over arguments about intellectual property rights and China’s restrictions on foreign book and film sales.
Although we are still far away from the dollar high this year against the pound, the added pressure on the US economy, despite strong non-farm pay roll figures last week, has pushed £/$ further in that direction.
An expected result in Europe is rate changes by the ECB and BoE but the question is how soon and in what direction? The consensus in the UK is that there may be a rate increase as soon as May with recent economic data showing UK inflation edging up and retail sales still growing strongly.
The ECB meets this Thursday to discuss the state of the European economy and with the hawks circling over the past few weeks with one hawk, Austria’s Libscher, citing the reason that “everything that is necessary needs to be done to keep inflationary expectations where the are”, they could possibly follow in the same direction.
As mentioned in yesterdays Wise Money report the commodities market may be a key area to keep an eye on this year with oil and gas key components in every economy especially those that are highly dependant and high consumers like the US. An aggressive stance by President Hugo Chaves of Venezuela to take control of several major oil projects owned by American and European companies by May 1st will add further tension, just as it has seemed to ease off after the UK-Iran issue.
Commodity linked currencies have done well this year for instance; the Australian dollar hit a 16-year high against the dollar on Tuesday. Brazil's real touched a six-year high versus the dollar on Monday and the Canadian dollar recently rose to its highest level since December 2006.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
posted by Wise Money @ 3:34 PM
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