Dollar Holds Gains Against Euro


The dollar held gains against the euro before a report forecast to show U.S. consumer inflation accelerated in March, bolstering speculation the Fed will slow the pace of interest-rate cuts.

The U.S. currency strengthened yesterday after data showed wholesale prices increased more than forecast in March and New York state manufacturing unexpectedly expanded this month. Futures traders reduced bets that the Fed will cut its target lending rate by a half-percentage point this month.

The dollar traded at $1.5793 per euro at 9:52 a.m. in Tokyo from $1.5790 yesterday in New York, when it climbed 0.3 percent. The U.S. currency touched $1.5913 on April 10, the weakest level since the European currency's debut in 1999. The dollar was little changed at 101.84 yen, after gaining 0.7 percent yesterday. The euro bought 160.84 yen from 160.78. The dollar may rise to 102.50 yen today, Ito forecast.

The British pound traded at 80.47 pence per euro after yesterday touching an all-time low of 80.64 pence as the Royal Institution of Chartered Surveyors' measure of sentiment in the U.K. housing market decreased to the lowest in March since records began in 1978.

The dollar gained to $1.5751 per euro yesterday after the Labor Department said prices paid to U.S. producers rose a faster-than-expected 1.1 percent in March. U.S. consumer prices, unchanged in February, probably increased 0.3 percent, according to a Bloomberg News survey of economists. The Labor Department release the data at 8:30 a.m. Washington time.

Losses in the euro may be limited by speculation consumer prices in the 15 countries that share the currency accelerated, limiting the scope to lower interest rates. Data later today may confirm a preliminary estimate that European inflation rose 3.5 percent in March, the fastest pace in almost 16 years.

 


TradingEconomics.com, Bloomberg
4/15/2008 6:42:40 PM