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 user 2006-11-27 at 10:04:00 am Views: 41
  • #16868

    Dollar’s downward slide continues
    dollar has continued its downward slide against the euro, slipping to
    20-month lows.The dollar fell to $1.3172 against the euro overnight,
    before recovering to $1.3121 in mid-morning
    for “collective vigilance” from France’s finance minister, amid fears
    the fall may drive up European export prices, triggered the
    improvement.Thierry Breton added that the strong euro would be
    discussed by European Union finance chiefs later on Monday.Meanwhile,
    sterling rose to $1.9371 against the dollar, buoyed by strong housing
    market figures.

    Economic worries
    The dollar has taken a hit
    in recent days as economic data prompted concerns about the health of
    the US economy.US monetary policy chiefs are widely expected to cut
    rates in coming months, while growth forecasts have been cut and the
    country’s housing market is suffering from a slowdown.Meanwhile recent
    figures show that consumer spending growth is expected to slow slightly
    over the all-important Christmas shopping period.In contrast, data from
    the eurozone has given a boost to the euro.Recent figures have shown an
    unexpected rise in German business sentiment and French business
    confidence is at five-year highs.”This is very much a case of strength
    in the European currencies,” said Teis Knuthsen, Danske Bank foreign
    exchange chief.”I think the European growth outlook has been reassessed
    following quite strong economic numbers,”However, the improvement in
    the euro’s fortunes has prompted concern about exports.Shares in
    carmakers Peugeot, Renault, BMW and DaimlerChrysler have all been
    pressured by the news.

    Dollar loses ground against euro
    The dollar has plunged to its lowest level against the euro since April 2005 amid concerns for the US economy.
    euro surged to $1.3086 against the dollar, with many other currencies
    following suit.Sterling rose almost 1% to $1.93, the yen hit a
    two-month high and Russia’s rouble rose to a seven-year high.Analysts
    have voiced concerns about the US economy after the White House
    downgraded its growth forecasts amid a sharp slowdown in the housing
    market.Meanwhile, expectations that the European Central Bank is once
    again about to raise interest rates gave a lift to the euro.Recent
    figures showing an unexpected rise in German business sentiment – its
    seventh quarterly rise in a row – also helped. So did French data
    showing that business confidence held at five-year highs in
    November.However, traders added that thin trade as a result of the US
    Thanksgiving holiday might have benefited the euro.”For the time being,
    the news flow is favouring the euro. If we close above $1.30 today, the
    key will be if we reject all of this as a Thanksgiving phenomenon or
    not,” said Ian Gunner, head of foreign exchange research at Mellon