Forex - Dollar recovers as oil price spike narrows US rate cut expectations |
|
|
|
Published
:
Thu, 13 Sep 2007 08:17
|
SINGAPORE (Thomson Financial) - The US dollar was steady against the euro though slightly lower against the yen Thursday, recovering some of its prior-day losses, as record-high oil prices left traders uncertain about how much the Federal Reserve may shave off interest rates at next week's meeting.Crude oil futures were holding above 79 dollars a barrel in Asian trade Thursday after breaking above 80 dollars a barrel in New York Wednesday for the first time ever. The spike, which came after US data showed a surprise decline in inventories in the latest week, revived concerns about inflation pressures in the US.'The surging oil price might complicate the FOMC decision because of the possible inflationary impact,' said John Noonan, analyst at Thomson IFR. The Fed may opt to cut rates by a quarter-point instead of a half-point as a result, disappointing those investors who are expecting a bigger move.But Sean Callow, senior currency strategist at Westpac in Singapore, said the Fed may not view the oil price with too much alarm.'The impression I get from the Fed in the past few years is that they tend to see [the oil price] more as a constraint on spending than an inflation impulse,' he said.The Fed 'has a lot on its plate' given the problems in the credit markets and home loan sector, he said.'I think the oil price is more likely to be seen as a further squeeze on consumer wallets, reinforcing the Fed's inclination to cut rates,' he said.The dollar was last trading at 114.17 yen, down from 114.27 yen in early Sydney trade. The euro was quoted at 1.3893 dollars, unchanged from its Sydney level and down from yesterday's record above 1.39 dollars.The euro has gained in recent weeks as the European Central Bank has maintained a hawkish tone, while the Fed is expected to start easing, further widening the yield differential between the US and the euro zone.Singapore 2.30 pmUS dollar114.17 yen1.1845 sfrEuro1.3893 usd158.81 yen1.6462 sfr0.6852 stgSterling2.0269 usd231.68 yen2.4019 sfrAustralian dollar0.8395 usd0.4140 stg95.95 yenNew Zealand dollar0.71015 usdciara.linnane@thomson.combruce.hextall@thomson.combhx/jm/ms/cl/zrCOPYRIGHTCopyright AFX News Limited 2007. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
|
|
|
|
Print this Story
Japan forex reserves rise to record 923.72 billion dollars in July 