Forex - Dollar remains weak after less hawkish Fed statement; awaiting US ISM |
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Thu, 01 Feb 2007 15:24
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LONDON (AFX) - The dollar remained weak after last night's mildly dovish statement by the Federal Open Market Committee following their decision to leave interest rates unchanged.This afternoon's US data failed to give the currency a lift, with figures on personal income and consumption coming in in line with market expectations, while weekly jobless claims numbers were slightly above forecasts.The latest US ISM manufacturing data later this afternoon is likely to take centre stage for today, however, particularly as yesterday's weaker-than-expected Chicago PMI number suggested today's figure could be disappointing.'Today's ISM manufacturing survey is very important. In light of the drop in the Chicago PMI, markets are on high alert for a steep drop,' said HBOS currency analyst Steve Pearson.The dollar has been broadly weaker throughout today after the Federal Reserve last night kept its interest rates unchanged and adopted slightly less hawkish rhetoric in its accompanying statement.Analysts noted that it downgraded its depiction of the inflation outlook, using the words 'improved modestly' from the previous use of 'elevated'.'In view of the surprising strength of US economic data since the turn of the year, there are clearly those who had anticipated a marked rise in the use of hawkish rhetoric by the FOMC,' said Neil Mellor at the Bank of New York.Elsewhere, the yen and the Swiss franc continued to rise as speculation increased that carry trades -- when investors borrow in low-yielding currencies in order to invest in higher-yielding assets elsewhere -- could begin to unwind.Yesterday, US Treasury Secretary Henry Paulson said he was watching the yen have ry, very closely', propelling the Japanese currency below the 121 yen level against the US dollar and below 157 yen against the euro.The Swiss franc has also been gaining on speculation that Swiss National Bank president Jean-Pierre Roth could make further comment on the weakness of the Swiss currency and hint at further interest rate hikes in his speech this afternoon.The pound was also firm after this morning's stronger-than-expected UK PMI survey on manufacturing activity.The Chartered Institute of Purchasing and Supply's purchasing managers index rose to 52.8 in January from 52.0 in December, revised up from 51.9 previously.The reading is above the median forecast of analysts polled by AFX News, who had predicted a small decline to 51.7, and marks the first acceleration in the index since September last year.Today's data do add to the recent run of very strong figures on the UK economy which have suggested that the Bank of England will raise interest rates again soon, possibly as early as February, particularly as the prices components were all very strong.'The modest expansion in activity implied by the PMI is likely to have little bearing on the monetary policy debate. However, the increase in output prices will worry the MPC that strong domestic growth and limited capacity are providing a boost to underlying inflationary pressures which is likely to fuel concerns that were expressed in the January BoE minutes,' said Matthew Sharratt at the Bank of America.London 1357 GMT London 1030 GMTUS dollaryen 120.31 down from 120.56sfr 1.2424 down from 1.2452Eurousd 1.3015 up from 1.3004stg 0.6614 down from 0.6620yen 156.61 down from 156.77sfr 1.6161 down from 1.6192Sterlingusd 1.9683 up from 1.9642yen 236.83 up from 236.81sfr 2.4452 down from 2.4458Australian dollarusd 0.7751 down from 0.7755stg 0.3938 down from 0.3948yen 93.265 down from 93.499jessica.mortimer@thomson.comjkm/roCOPYRIGHTCopyright AFX News Limited 2006. 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.AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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Metals - Gold edges lower as market consolidates, dollar recovers 