US interest rates dip
The US dollar was mostly weaker against major currencies in early morning trade this morning, extending overnight losses after the minutes from the Federal Open Market Committee's meeting last month appeared to leave the door open to further interest rate cuts.
The Fed slashed interest rates by 50 basis points in September and another reduction will put further pressure on the US dollar as traders go looking elsewhere for higher-yielding currencies.
The Fed said that the US economy was likely to grow below its potential for a while and that inflation had moderated. This suggests that the Fed may need to cut interest rates further and the continued pricing of a 25 basis points cut by early 2008 weighed on the US dollar.
The euro traded as high as 1.4115 dollars overnight after European finance ministers indicated they were more concerned about pressuring China over the value of the yuan than in stemming the rise of the euro against the dollar.
China has been under increasing pressure from its major trading partners, including the US and European Union, to increase the value of the yuan because it gives Chinese exporters an unfair competitive advantage by making their products cheaper.
Meanwhile, the Australian dollar was higher across the board in overnight trading as weakness in the greenback, a growing appetite for risky assets and higher commodity prices supported the currency.
A strong housing finance report for August, to be released at 13.30 today, could see the Aussie punch through Monday's 23-year high of 90.33 US cents.
Finally, the British Retail Consortium said like-for-like sales, which exclude new stores and space, were up 3.0 % in the year to September. This was higher than the 1.4 % growth forecast and ahead of August's 1.8 %.
The BoE's next move is widely tipped to be a cut in interest rates, following five increases in the past year or so, but economists are divided on how soon to expect a move downwards.
Meanwhile, the euro was recovering slightly after losses on Tuesday. European monetary policymakers have been voicing concern about the euro's persistent strength, it is currently trading above 1.40 to the dollar, but a Eurogroup meeting on Tuesday night did not break new ground as the euro zone's finance ministers reiterated earlier concerns about "excessive volatility" in exchange rates.
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 Fed slashed interest rates by 50 basis points in September and another reduction will put further pressure on the US dollar as traders go looking elsewhere for higher-yielding currencies.
The Fed said that the US economy was likely to grow below its potential for a while and that inflation had moderated. This suggests that the Fed may need to cut interest rates further and the continued pricing of a 25 basis points cut by early 2008 weighed on the US dollar.
The euro traded as high as 1.4115 dollars overnight after European finance ministers indicated they were more concerned about pressuring China over the value of the yuan than in stemming the rise of the euro against the dollar.
China has been under increasing pressure from its major trading partners, including the US and European Union, to increase the value of the yuan because it gives Chinese exporters an unfair competitive advantage by making their products cheaper.
Meanwhile, the Australian dollar was higher across the board in overnight trading as weakness in the greenback, a growing appetite for risky assets and higher commodity prices supported the currency.
A strong housing finance report for August, to be released at 13.30 today, could see the Aussie punch through Monday's 23-year high of 90.33 US cents.
Finally, the British Retail Consortium said like-for-like sales, which exclude new stores and space, were up 3.0 % in the year to September. This was higher than the 1.4 % growth forecast and ahead of August's 1.8 %.
The BoE's next move is widely tipped to be a cut in interest rates, following five increases in the past year or so, but economists are divided on how soon to expect a move downwards.
Meanwhile, the euro was recovering slightly after losses on Tuesday. European monetary policymakers have been voicing concern about the euro's persistent strength, it is currently trading above 1.40 to the dollar, but a Eurogroup meeting on Tuesday night did not break new ground as the euro zone's finance ministers reiterated earlier concerns about "excessive volatility" in exchange rates.
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 @ 8:31 AM
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