• search

Array

By Staff
Subscribe to Oneindia News

SINGAPORE, May 3 (Reuters) The U.S. dollar inched down on Wednesday, hovering near recent lows against the euro and the yen, having failed to extend gains on renewed speculation about further U.S. interest rate rises.

The Australian dollar jumped half a cent to a 7-{ month high at about 76.77 U.S. cents after Australia's central bank lifted rates by a quarter of a percentage point to 5.75 percent.

The euro was slightly firmer at $1.2631, having climbed as far as $1.2667 in New York, and remained close to Monday's one-year peak at $1.2690.

Against the yen, the dollar was a tad softer at 113.17, after finding some support around 113.13 yen in New York. But it was uncomfortably close to recent seven-month lows around 112.35.

Activity was light with Japan starting a holiday that lasts through to the weekend, but traders thought it bearish that the dollar could not sustain gains made after Fed Chairman Ben Bernanke was quoted on Monday playing down the prospects of a pause in rate rises.

Bernanke speaks later on Wednesday at a community development summit in Washington D.C. and traders said they hoped he would clarify his policy outlook.

''The correction in the dollar yesterday was limited and that was a surprise,'' said Sharada Selvanathan, a currency strategist at BNP Paribas in Singapore. ''Today, Bernanke is speaking and maybe he will clarify his views.'' THE RATE DEBATE The dollar came under pressure last week after Bernanke said that the Fed may pause raising rates at some point in the future.

The market took that as a sign that the Fed would end almost two years of monetary tightening after an expected rate increase to 5 percent at the Fed's May 10 meeting.

''Fed-favoured journalists and the market had interpreted Bernanke's testimony as a signal that Fed funds would be lifted to 5 percent next week, and then left alone, but apparently they were wrong,'' said Michael Thomas, head of economics and strategy at broker ICAP.

''Apparently, Bernanke's speech is about ''Revitalising Communities'', so he may not speak about what he really meant to say about monetary policy,'' added Thomas.

Sean Comber, an economist at ANZ Investment Bank, noted U.S. economic data on Tuesday was weak, even if it was only of secondary importance.

Combined with higher oil prices and some technical selling, it had pushed U.S. Treasury yields lower, removing some of that particular pillar of support for the dollar.

In contrast, data out of Europe and Britain was stronger, giving the euro and sterling a boost.

Sterling was little changed at $1.8390, close to an almost eight-month high hit on Tuesday at about $1.8425.

The Australian dollar moved sharply higher after Australia raised rates for the first time in 14 months in a pre-emptive move to ward off inflation.

''Not all market participants had expected a hike and the statement is pretty hawkish,'' said Selvanathan at BNP Paribas.

''I am a bit surprised at the move in the Aussie dollar following the decision.'' Currency bid prices at 0153 GMT. All data taken from Reuters with percent change calculated from the daily U.S.

close at 2130GMT.

Last US Close %Chg YTD % 2005 Cls .

------------------------------------------------------------- Euro/dlr 1.2633 1.2610 +0.18 +6.86 1.1822 Dlr/yen 113.18 113.31 -0.11 -4.00 117.90 Euro/yen 143.04 142.97 +0.05 +2.60 139.42 Dlr/swiss 1.2353 1.2374 -0.17 -5.98 1.3139 Stg/dlr 1.8395 1.8399 -0.02 +6.77 1.7228 Dlr/can 1.1033 1.1061 -0.25 -5.34 1.1656 Aus/dlr 0.7665 0.7618 +0.62 +4.58 0.7329 Euro/swiss 1.5608 1.5610 -0.01 +0.48 1.5533 Euro/stg 0.6866 0.6856 +0.15 +0.07 0.6861 REUTERS CS VP0925

For Breaking News from Oneindia
Get instant news updates throughout the day.

X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more