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 user 2006-11-27 at 9:59:00 am Views: 91
  • #17032

    Dollar’s downward slide continues
    The 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 trade.Calls 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.
    The 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 Bank.