Forex: Wednesday's review
The dollar fell to an eight-week low
against the euro on speculation a sluggish recovery in U.S. housing and labor markets will deter the Federal Reserve from raising interest rates.
The U.S. currency dropped to the lowest in two weeks versus the yen before reports today forecast to show continuing jobless claims increased. It also fell after data yesterday revealed China’s overall holdings of U.S. government debt declined in November. The euro rose
after the region’s finance ministers made a commitment to increase the size of a bailout fund to tackle the debt crisis.
The euro has risen 5% against the dollar since ECB President Jean-Claude Trichet warned on Jan. 13 that the central bank will act if needed to contain inflation risks, which he said “could move to the upside.”
Inflation accelerated to 2.2% last month, breaching the ECB’s 2% limit for the first time in more than two years. Trichet said last week it may quicken further before moderating toward the end of the year.Gains in the euro were tempered
on speculation European policy makers will delay efforts to provide more funds for debt- strapped countries.
EUR/USD: the pair shown high in the field of $1,3540 then receded.
GBP/USD: the pair bargained within the limits of $1,5940-$ 1,6040.
USD/JPY: on results of yesterday's session the pair decreased in around Y82,00.
UK data includes SMMT Car Production at 0930GMT as well as the 1100GMT release of the CBI Industrial Trends Survey for January. France industrial orders for November rounds off European data at 1100GMT.
US data starts at 1330GMT, when initial jobless claims are expected to fall 25,000 to 420,000 in the January 15 employment survey week after rising 35,000 in the previous week. Claims were at a level of 420,000 in the December 18 employment survey week.