The tone in the currency markets was unchanged overnight, with the dollar maintaining its moderate strength. None of today's economic events is expected to significantly change this state of affairs.
Dominating the forex market is anticipation of today's speech to Congress by
"I think Greenspan's speech could turn out a bit of an anti-climax," said Matthew Clements of
in London. Clements thinks the speech will stress the inflation risks to the economy. "He's likely to be fairly bearish about the U.S. economy and to suggest that higher rates could happen."
As expected, the
European Central Bank
left euro zone interest rates unchanged at its meeting this morning.
wrote about the
interest-rate decision in a separate article. Forex prices barely moved on this non-event.
"By the end of August, I imagine they will raise by 50 basis-points, not just 25. The euro data show that oil prices have pushed up inflation in many euro zone countries," Clements said.
said economic growth in the U.S. will continue. "I think the fundamentals of the U.S. economy are strong and prospects for continued expansion are very good," he told reporters in Tokyo at the
Group of Eight
The euro is still quite weak and is close to its lowest levels of yesterday at $0.9220.
Once again the issue of ongoing funds outflows from the euro zone is gaining attention.
of Germany is in talks to acquire
of Holland is purchasing units of the
Traders are concerned that mergers and acquisition transactions in which euro zone companies need dollars to buy U.S. companies will keep the euro on the defensive.
Dollar/yen continues to trade quietly around 108.15.
Euro/yen pushed below the parity level of 100 yen per euro and is opening at 99.70.
Dollar/Swiss franc matched the dollar's strength versus the euro and is back around 1.6790. The euro/Swiss franc rate is steady at 1.5485.
The pound eased down modestly against the dollar and is opening at $1.4955. Euro/sterling is steady at 61.65 pence.
The Canadian dollar has not budged overnight and is opening around C$1.4770.
The Australian dollar has ticked up to $0.5785, but remains weak. Australian manufacturing output prices rose 1.9% in the second quarter of the year and were up 7.3% year-on-year.
The New Zealand dollar is marginally firmer at $0.4575. The key issue for both the Australian and New Zealand currencies is the future track of U.S. interest rates, as well as the implications for the differential with the Aussie and Kiwi equivalents.
The South African rand weakened to 6.98.
The Polish zloty dropped lower to 4.37 per dollar following the announcement of a delay in completing the sale of a stake in the Polish telecom company
. The currency has since recovered after a positive tax vote in the Polish parliament. It is now around 4.35.
The Mexican peso is unchanged at 9.44.
The Indonesian rupiah continues to firm and is opening at 8,900.
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