|
|
Mauritius: The dollar still in intensive care unit
 |
 |
|||||||||
|
||||||||||
|
|
|||||||||
|
||||||||||
L'Express (Port Louis)
10 October 2007
Posted to the web 11 October 2007
Vassan CALEEMOOTOO
Port Louis
The pusillanimous dollar rose to a six-week high against the euro last week as positive US employment data boosted hopes that the credit meltdown did not seep into other sectors of the US economy. The focus suddenly changed as market players were scrutinizing job data to see whether they were bullish enough to ward off all the doomsday scenarios.
With the accumulation of positive economic data, analysts were prepared to believe that both the US economy and US consumers might be more resilient to shocks than previously expected. This regain of confidence in the greenback made traders squared up short positions, hence, pushing the euro to $1 4095 down from a high of $1 4281.
However, the greenback could not conjure a string of winning data. News fell that the Qatar's prime minister stated in an interview that the country's $50 billion sovereign wealth fund had slashed its exposure to the US currency by almost half for the past two years. This caused investors to believe that no amount of nips and tucks would revive the dollar's negative trends in the near future.
In addition, even robust US employment report did not eradicate investors' belief that the Federal Reserve would ease on interest rates at its next meeting. US job data showed that 110 000 jobs were created in September; it's highest since May. In addition, the futures market reflected a 50 percent implied chance of a cut in the benchmark rate this month.
On the other hand, comments by the European Central Bank president, Jean-Claude Trichet, stated that the next move in euro zone monetary policy was a hike in interest rates. He, however, did not give an exact timing on when the rise would take place.
The US dollar traded at MUR 30.856 yesterday compared to MUR 30.907 last week.
Sterling twisted and turned as it tracked the US currency's movement for the past week. Traders were seen hesitating to take big positions ahead of the Bank of England's (BoE) monetary policy meeting. Many analysts, troubled by the distressed mortgage lender Northern Rock, focused on UK's economic fundamentals to obtain clues as to whether the BoE could come with a surprise interest rate cut
. The BoE, however, left rates unchanged and did not issue any kind of statements that might have led market players to believe that an interest rate cut might be brewing in the near future.
Towards the end of the week, the pound firmed up due to a pick-up in risk appetite and stronger than expected British factory prices and manufacturing output.
The overall sentiment for the pound remained gloomy as many economists believed that it was overvalued and that the risk of an economic slowdown in the UK would persist due to the turbulences in the financial market.
The Sterling was traded at MUR 62.73 as against MUR 63.09 last week.
The Japanese yen was quite weak at the beginning of last week's trading as the US dollar got a boost from bullish US job growth data. However, it recouped most of its losses when exporters started to sell the dollar aggressively. However, the yen could not keep the momentum as traders started to resume carry trades, ditching the Japanese currency to buy high yield ones.
The Japanese yen was traded at MUR 26.33 as against MUR 26.80 last week
Major data/events this week:
Wednesday 10 Oct : US Mortgage index, Fed budget
Thursday 11 Oct : US Jobless claims, Int'l Trade EZ GDP
Friday 12 Oct : US PPI
Monday 15 Oct :
|
Tuesday 16 Oct : US redbook
| |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Copyright © 2007 L'Express. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Make allAfrica.com your home page | RSS Feed | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Top | Site Guide | Who We Are | Advertising | Search | Subscribe | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Questions or Comments? Contact us. Read our Privacy Statement. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
