Forex - Dollar stays on back foot; G7 meeting eyed |
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Published
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Thu, 18 Oct 2007 09:29
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LONDON (Thomson Financial) - The dollar remained on the back foot ahead of the world's biggest economies pow wow in Washington this weekend, what with expectations of further US rate cuts gaining ground after the housing market and stable inflation figures.While the G7 meeting has been much hyped to bring about some change in rhetoric in order to stem the dollar's steep losses, analysts are not holding out much hope.US officials are clearly showing little interest to intervene, despite protests from elsewhere about the dollar's steep decline.'The reality is that US officials are likely to welcome the fall in the dollar as long it does not fuel inflation pressures and remains orderly,' said Mitul Kotecha at Calyon.'Nonetheless, there is no doubt that foreign exchange will be discussed at the G7 meeting, but the real question is whether anything of substance will emerge,' he added.Afterall, in previous G7 meetings, there has also been much speculation about the extent that currencies will be discussed, only for disappointment afterwards, he noted.'It seems that forex markets are not going to record a more pronounced correction ahead of the G7 meeting unless equity markets see heavy losses again, which looks unlikely just now,' said Antje Praecfke at Commerzbank.Data yesterday was in line with broad dollar weakness. While headline US inflation rose more notably than expected in September, core inflation remained almost flat.'Price developments therefore do not constitute an obstacle for further Fed rate cuts. This fact supports risk appetite and equity markets, which are still hoping for an easing of monetary policy in the US if the economy were to weaken strongly due to the current financial market crisis,' added Praecfke.At the margins, the IMF's announcement overnight that it has trimmed its US economic growth forecast for 2008 by nearly one percentage point also weighed on the dollar.The IMF predicts the US economy will expand by 1.9 pct in 2008, less than its previous estimate of 2.8 pct. This year, growth will slow to 1.9 pct from 2.9 pct in 2006, it said.Elsewhere, the pound was little changed ahead a raft of data at 9.30 am BST including retail sales and public sector finances.London 0921 BST Hong Kong 0700 GMTUS dollaryen 116.18 down from 116.52sfr 1.1740 down from 1.1748Eurousd 1.4245 down from 1.4251yen 165.41 down from 166.07sfr 1.6725 down from 1.6744stg 0.6977 dwon from 0.6977Sterlingusd 2.0413 up from 2.0426yen 237.10 down from 238.00sfr 2.3975 down from 2.3995Australian dollarusd 0.8915 down from 0.8947stg 0.4367 down from 0.4379yen 103.57 down from 104.25sivakumar.sithraputhran@thomson.comss/raCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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