Daily Forex News
 
Daily World Currencies News from London
Saturday 11th of October 2008
February 2, 2007

US dollar weaker over week

Story link: US dollar weaker over week

The yen weakened versus the euro and sterling this week, but gained on the US dollar as the greenback weakened after the Federal Reserve voted to hold interest rates at 5.25 percent for another month. Even though the Fed’s decision was expected, the statement released with the announcement was not as strong as some had anticipated.

The dollar dropped 0.4 percent over the week to $1.9680 in relation to sterling, while it fell 0.5 percent versus the euro, to $1.2970.

Recent weakness in the yen was not helped by news that retail sales and consumer spending both were lower in December in Japan. Neither did continued low interest rates after this month’s decision to leave interest rates on hold at 0.25 percent, which encouraged investors to sell the yen to buy higher-yielding currencies.

There were statements out of Europe that some felt implied that the yen’s weakness would be a topic of discussion at the upcoming G7 meeting in Germany. Others, including the Japanese, felt that differences between the Europeans and US officials, including US concerns about the Chinese renminbi, would keep focus off the yen at the meeting.

The Japanese currency saw gains after US Treasury Secretary Paulson told the US Senate that he is watching the yen “very, very closely”, but those gains were mostly reversed after analysts emphasized another statement from the Treasury secretary that the weakness in the yen is fundamental and not political in nature.

While the yen added 0.3 percent versus the greenback to ¥121.05, it dropped 0.2 percent each against the euro and sterling, to ¥157.20 and ¥238.50 respectively.

 

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