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Dollar rises against euro, pound, yen
Wednesday, January 9, 2008
NEW YORK (AP) - The dollar rose Wednesday, pushed by speculation that the White House may offer tax breaks and ahead of interest-rate meetings in Europe and a speech by Federal Reserve Chairman Ben Bernanke Thursday.
The dollar rose against the euro. The 15-nation currency bought $1.4663 in late New York trading, down from $1.4710 Tuesday.
The German government said November retail sales fell by 1.3 percent, more than the 1 percent forecast by analysts polled by Dow Jones Newswires.
Also lifting the dollar were remarks Tuesday by President Bush, who said he was watching carefully to see whether the U.S. economy would benefit from some sort of help by the federal government -- which some perceived as a possible tax cut or other incentive.
The British pound fell to a nine-month low of $1.9572 on expectations the Bank of England might lower its benchmark interest rate Thursday for the second month in a row. That was down from the $1.9713 it was worth late Tuesday.
The European Central Bank also meets Thursday to set interest rates.
The ECB is facing sliding business and consumer confidence in the euro zone, as well as inflation estimated at 3.1 percent -- well above its guideline of just under 2 percent.
Higher rates, used to combat inflation, also can strengthen a currency, and the euro's near-record strength has raised concern among businesses and politicians about the competitiveness of European exports.
"Although no change still remains the most likely outcome, once again traders will be watching this verdict and the subsequent press conference for further clues" about whether the euro can surpass its record of $1.4967 and reach $1.50 in the months ahead, said James Hughes of CMC Markets.
The pound has suffered from worries about Britain's housing market.
The debate on the Bank of England's rate decision "is clearly very much in play," Hughes said.
The Federal Reserve has cut rates three times over recent months as the subprime credit crisis has raised fears over the health of the economy, and investors have almost completely priced in another interest rate cut by the Fed in late January.
Bernanke's speech tomorrow will be combed for clues as to the Fed's course of action.
In other trading, the dollar rose to 109.47 Japanese yen from 109.36 yen late Tuesday and 1.0111 Canadian dollars from 1.0022 Canadian dollars. However, the dollar slipped down to 1.1144 Swiss francs Wednesday from 1.1145 Swiss francs.
