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Dollar drops against euro and yen on US growth worries, gold rises - Daily News Egypt

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Dollar drops against euro and yen on US growth worries, gold rises

LONDON: The dollar dipped against leading currencies on Thursday as dealers worried about slowing economic growth in the United States, analysts said. In European trading, the euro rose to $1.4746, from $1.4712 in New York late on Wednesday. Against the Japanese currency, the dollar eased to 108.05 yen from 108.13. In commodities trading, gold scored …


LONDON: The dollar dipped against leading currencies on Thursday as dealers worried about slowing economic growth in the United States, analysts said.

In European trading, the euro rose to $1.4746, from $1.4712 in New York late on Wednesday.

Against the Japanese currency, the dollar eased to 108.05 yen from 108.13. In commodities trading, gold scored a record high $948.59 per ounce, after New York crude oil struck a historic peak of $101.32 per barrel.

Analysts said that the dollar wobbled after the Federal Reserve had slashed its growth forecast on Wednesday, raising expectations of further US interest rate cuts.

The dollar in general is weak against major currencies … as a feeling of insecurity has returned to markets, said Kenichi Yumoto, vice president of forex sales and trading at Societe Generale.

On Wednesday, the Fed slashed its US growth forecast for 2008 by half a percentage point to a range of 1.3-2.0 percent due to a housing market slump, tighter credit conditions, financial market turmoil and higher oil prices. At the same time the minutes of the January Fed meeting – when the key rate was cut by a half point to 3.00 percent – highlighted worries that the risks of a downturn in the economy were significant.

But the effect of the Fed s comments were at least partly offset by stronger-than-expected US inflation data, which raised concerns the Fed may have limited room for further aggressive interest rate cuts.

Over the 12 months to January, headline consumer inflation rose 4.3 percent while the core CPI increased 2.5 percent, the US government said.

Dealers are now waiting their next lead from US retail sales data due on Friday.

We maintain our view that the dollar should ease further on a broad basis in the wake of worsening US data due for release over the coming weeks, added Commerzbank analyst Gavin Friend.

Sterling climbed after official data showed that retail sales jumped in January, boosted by seasonal price cutting and a buoyant food sector.

On a monthly basis, British retail sales climbed by 0.8 percent in January from December – the highest monthly rate since February 2007.

Analysts said the news would ease the pressure on the Bank of England to cut British interest rates next month.

In Europe on Thursday, the euro changed hands at $1.4746 against $1.4712 late on Wednesday, at 159.30 yen (159.10), 0.7546 pounds (0.7574) and 1.6185 Swiss francs (1.6177).

The dollar stood at 108.05 yen (108.13) and 1.0976 Swiss francs (1.0993).

The pound was at $1.9538 (1.9419).

Later Thursday on the London Bullion Market, the price of gold climbed to $943.69 an ounce from $924 late on Wednesday. -AFP

Topics: FJP

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