AFX News Limited
Forex - US dollar mixed Sydney morning amid concerns of slowing EU growth
09.05.2006, 10:34 PM
SYDNEY (XFN-ASIA) - The US dollar was trading mixed against major currencies, rising against the euro on concerns about slowing growth in Europe but weaker against the yen, dealers said.
They said the yen is maintaining its strength ahead of the Bank of Japan possibly providing views on inflation on Friday.
At 11.15 am, Sydney (0015 GMT) the US dollar was trading up 1.2819 eur from 1.2812 in late New York trade while the yen was at 116.37 usd from 115.93.
Traders said the market has been largely focusing on what will come next with eurozone and US interest rates.
National Australia Bank currency strategists said higher eurozone rates will tend to bolster the single currency by making certain types of investments more attractive.
Meanwhile, they noted that while the US Federal Reserve paused its two year rate-raising cycle in August the European Central Bank last week appeared to indicate it will raise eurozone rates at its next meeting after leaving them unchanged this month.
'The hurdle for the euro is that a few further ECB rate hikes are already priced in and the speculative community is very long the currency,' the NAB strategists said.
'That's why we remain reluctant to target eur/usd above 1.3000 eur in the absence of say forecasting a hard landing in US growth.'
They noted that overnight St. Louis Fed President William Poole, a non-voting Fed member, played down the risk of a hard landing in the US, led by housing.
'We might have some weakness in certain sections of the country, but I think we're just not going to have a housing crash that's nationwide,' Poole said.
Sydney 11.15 am (0015 GMT)
US dollar
yen 116.37
sfr 1.2340
Euro
usd 1.2819
stg 0.6767
yen 148.89
sfr 1.5816
Sterling
usd 1.8944
yen 220.05
sfr 2.3370
Australian dollar
usd 0.7707
stg 0.4068
yen 89.535
New Zealand dollar
usd 0.6479
