Euro Strengthens on Dollar; Gold Climbs
The euro was trading near its all-time high again Tuesday as the European Central Bank continues to show no sign of letting up on its inflation fight.
One euro recently was selling for $1.5810, up from $1.5804 Monday, and it had traded as high as $1.5875 earlier in the session. The common currency reached its best-ever level around $1.591 last Thursday before retreating.
"There is a sharp contrast in official monetary policy between the
Federal Reserve
and the ECB," says David Gilmore, a partner at Foreign Exchange Analytics. "Until that picture changes, it's going to be hard for the dollar to rally against the euro."
The Fed is following a policy of loose monetary policy and low interest rates in its effort to avoid an economic slowdown in the U.S. at the possible cost of higher inflation. Meanwhile, the ECB is keeping the cost of borrowing euros relatively high as it seeks to keep a lid on inflation, at the potential expense of economic growth.
The divergence in policies, and the resulting differential in interest rates, will keep the euro attractive to yield-seeking investors relative to the greenback, many observers believe.
In other currencies, the dollar was selling for 101.34 Japanese yen, up from 100.99 yen a day earlier. The British pound was trading at $1.9642, down from $1.9741 previously.
The
CurrencyShares Euro Trust
(FXE) - Get Report
was losing 0.2%, and the
CurrencyShares Japanese Yen Trust
(FXY) - Get Report
was off 0.6%. The
CurrencyShares British Pound Sterling
(FXB) - Get Report
was lower by 0.6%.
In the metals markets, gold prices were moving higher. Benchmark bullion futures were edging up $4 at $932.70 an ounce in recent action on the Comex division of the New York Mercantile Exchange
The
streetTracks Gold Shares
(GLD) - Get Report
, which holds bars of pure gold, was gaining 0.7%.
In the precious metals patch, shares of
Yamana Gold
(AUY) - Get Report
were up 1.5%, while
Newmont
(NEM) - Get Report
and
Barrick
(ABX)
also rose.
