Kamis, 03 Februari 2011

Dollar Rise Causes Chaos Egypt

United States Dollar extend gains on Thursday local time, because the chaos Egypt showed no signs of ending and European central banks reduce inflation rhetoric about the euro zone. At 2200 GMT (05:00 Friday GMT), the euro was at 1.3630 dollars against 1.3808 dollars late on Wednesday. The dollar also rose slightly against the Japanese currency, trading at 81.59 from 81.54 the previous day. 

In addition to violent protests Egypt, which has prompted several flight to the dollar, the main impetus for euro weakness and dollar strength is an indication of the European Central Bank President Jean-Claude Trichet that the bank is less worried about inflation than before - and that the rate hike will come in end of the year. 

After the ECB policy meeting, Trichet said in a statement that "price developments will remain in line with price stability over the relevant policy. "But he added, on the European economy, that "the risk of the economic outlook is still slightly skewed to the downside."
"Trichet's statement exacerbated the sell the euro overnight," said Michael Woolfolk of BNY Mellon. "Trichet and ECB board of governors is slightly towards higher interest rates this year, but at a slower speed than the market expected," he said. 

"It is likely that the ECB will begin to introduce a variety of expressions to prepare financial markets for higher interest rates first, sometime in the second half of this year," said Marie Diron of business consultants Ernst & Young. In the meantime, while also decrease the inflation, the U.S. central bank chief Ben Bernanke gave a slightly more optimistic view about the U.S. economy, also help the greenback. 

Speaking to reporters, Bernanke said the U.S. could expect to see "a step ahead of the economic recovery in 2011 than we saw last year." 

Dollar gain rose slightly against the British pound, which traded at 1.6139 dollars from 1.6189 dollars. Meanwhile, the dollar bought 0.9455 Swiss francs, compared with 0.9397 on Wednesday.

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