Dollar Pauses As Traders Mull US Data, ECB Remarks
Friday, July 4, 2008 at 10:29 am Under World News 6 views
TOKYO :The dollar took a breather in Asia on Friday after strong gains sparked by US jobs data that were not as bad as feared and signs that a eurozone interest rate hike may be a one-off, dealers said.
The dollar was quoted at 106.68 yen in Tokyo morning trade, down slightly from 106.81 yen in New York late on Thursday.
The euro edged up to 1.5712 dollars from 1.5691 dollars while holding steady at 167.49 yen.
The European Central Bank raised its key rate by a quarter point to 4.25 percent Thursday as expected. ECB chief Jean-Claude Trichet signalled the bank had not embarked on a series of hikes.
Trichet told a news conference the bank’s monetary policy “will contribute to achieving our objective” of price stability, a code phrase that suggested more increases were not immediately at hand, dealers said.
“A series of rate rises would be difficult” as the ECB is worried about slowing economic growth as well as inflation, said Kenichi Yumoto, vice president of forex sales at Societe Generale.
The prospect of a series of rate hikes would have made the euro more attractive to investors and boosted its value against the dollar, dealers said.
But at the same time there is “no room for an interest rate hike in the United States either,” said Yumoto.
“You can never be hawkish in monetary policy with stock prices falling and payrolls shrinking,” he said.
The Fed has slashed its key federal funds rate to 2.0 percent to try to shield the world’s largest economy from a housing slump and credit crunch.
The US economy lost 62,000 jobs in June, well below the figure of 100,000 that some had feared, official figures showed Thursday.
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