Forex Inspire

Euro Rate
NEW YORK — The euro rate is expected to maintain a stronger position against the dollar this week, but euro rate gains will be limited by thin year-end trading.
The euro rate is tipped to stay up versus the dollar because European Central Bank President Jean-Claude Trichet hinted that the central bank may vote to keep euro rate steady in January. In addition, the flow of money into dollars as investors have scaled back their use of leverage and riskier investments has nearly stopped at lightly staffed trading desks.
Few investors are taking new positions ahead of the new year, which means exchange currency are likely to remain inside last week’s narrow ranges (including the euro rate).

 

The euro rate appears set to hold on to its gains against the dollar this week. Here, a model of the new Slovak version of the coin.
 

Data that could result in a sharper turn for the euro rate include the December Chicago Purchasing Managers Index on Tuesday, weekly jobless claims the following day and the December manufacturing report from the Institute for Supply Management on Friday.
Analysts said the euro rate should ranging between $1.40 and $1.43, while the dollar likely will hover around the 90-yen area this week.
Late Friday in New York, the euro rate was at $1.4060 from $1.4016 late Wednesday, while the dollar was at 90.66 yen from 90.41 yen. The euro rate was at 127.47 yen from 126.61 yen. The U.K. pound was at $1.4654 from $1.4765, and the dollar was at 1.0679 Swiss francs from 1.0738 francs Wednesday.
“There is a mild bias towards dollar weakness, because this week Trichet reaffirmed to markets that a January rate cut is not a done deal,” said Kathy Lien, director of currency research at GFT in New York.
Mr. Trichet noted the retreat in energy prices and its potential effect on deflation. He reiterated that the ECB’s central policy is for inflation to be held below, though close to, 2%.
Because the Federal Reserve cut rates effectively to zero this month, the euro rate should continue to find support because euro rate are higher in the euro zone.
Yen advances are on hold after a recent warning of currency-market intervention from Japan’s Ministry of Finance. But, more than that, with traders on hold, so is this trade. The yen exhange currency is considered a relatively safe bet in times of market stress and also was gaining as investors unwound riskier positions funded in the yen. This deleveraging process isn’t over, said analysts, but will be reduced to a trickle until normal market volumes return in 2009.
Against the U.K. pound, the euro rate may make further advances after hitting an all-time high Friday of 95.75 pence.

Euro Rate

Source :
By RIVA FROYMOVICH

http://online.wsj.com