HONG KONG (Thomson Financial) - The U.S. dollar traded in a narrow range
against the euro and the yen in afternoon trading in Asia on Monday ahead of
the European Central Bank (ECB) meeting this week.
After a busy week in the U.S., which released its first-quarter economic
data and jobless figures while the Fed held its rate-setting meeting, investors
are now switching their attention to the euro area where the ECB will be holding
its meeting on May 8.
Most analysts are predicting that the ECB will maintain its key rate at a
six-year high of 4 percent as it continues to battle inflation. The ECB has kept
its rate unchanged since June, while the Fed has slashed its benchmark rates by
a total 325 basis points since September.
"The ECB meeting will be interesting this week after recent comments from
politicians about high inflation in the euro zone," said David Mann, currency
strategist at Standard Chartered Bank. "The ECB is likely to keep its rate on
hold."
At 1 p.m. (0500 GMT), the euro was trading at $1.5458 from $1.5447 in
Sydney this morning. The dollar was quoted at 105.24 yen from 105.40 yen.
Trading was tepid as Japanese financial markets were closed Monday for a
public holiday.
Consumer prices in the 15-member euro area rose 3.6 percent in March from a
year ago, the highest in 16 years and way above the ECB's 2-percent average
inflation target.
The European Commission has recently raised its inflation projection for the
euro area to 2.9 percent for the whole of 2008 from as low as 2.1 percent
previously.
Standard Chartered has maintained its view that the Fed's monetary easing
cycle is not yet over as it expects two more rate cuts of 25 basis points each
in the next Federal Open Market Committee meetings, Mann said.
The Fed on April 30 trimmed its key rate by a quarter of a percentage point
to 2 percent, the lowest since December 2004, and signalled that the rate may
stay unchanged for a while given creeping inflation in the United States.
The dollar gained on Friday in New York trade after the better-than-expected
jobs data in April. The U.S. economy shed 20,000 jobs last month, less than the
75,000 that most economists had predicted.
The unemployment rate also unexpectedly fell to 5 percent from 5.1 percent
in March.
Andrew Spencer, a foreign exchange analyst at Thomson IFR Markets, said the
dollar has found support as it is likely that the Fed will keep rates on hold
for the next few months.
Hong Kong 1 p.m. (0500 GMT)
U.S. dollar
yen 105.24
Swiss franc 1.0540
Euro
U.S. dollar 1.5458
yen 162.60
Swiss franc 1.6296
pound 0.7824
Pound
U.S. dollar 1.9753
yen 207.81
Swiss franc 2.0823
Australian dollar
U.S. dollar 0.9383
pound 0.4748
yen 98.71
jun.ebias@thomsonreuters.com
je/zr
COPYRIGHT
Copyright Thomson Financial News Limited 2008. All rights reserved.
The copying, republication or redistribution of Thomson Financial News Content,
including by framing or similar means, is expressly prohibited without the prior
written consent of Thomson Financial News.
|