Greenback in decline as low manufacturing report expected
Finotec | Jun 18, 2008 08:00PM ET
The dollar is in decline against the euro and yen on speculation a Federal Reserve report today will show a slowdown in U.S. manufacturing
The dollar is in decline against the euro and yen on speculation a Federal Reserve report today will show a slowdown in U.S. manufacturing, encouraging the central bank to delay increasing the interest rate. ``Today's manufacturing data may prompt yet more dollar selling,'' said Michiyoshi Kato, a senior vice president of currency sales at Mizuho Corporate Bank Ltd. in Tokyo, a unit of Japan's second-largest publicly traded financial group. ``With the U.S. economy still slowing, the Fed cannot raise rates this year.'' The dollar is currently trading at $1.5546 per euro as of 7:44 am, GMT compared with $1.5538 in New York yesterday. The U.S. currency fell to 107.66 yen from 107.88 in New York. The euro was little changed at 167.54 yen after touching 168.04 yesterday, the highest since July 23rd.
The pound fell against the euro for a third day after Bank of England Governor Mervyn King said yesterday `` a slowdown in the economy is necessary'' to tackle inflation, policy makers will tolerate a decline in living standards to tackle inflation. The pound slipped to 79.41 pence per euro and is little changed trading at $1.9639. ``the real numbers are showing a slowing economy and it's going to be tough for sterling to hold up,'' said Win Thin, a senior currency strategist at Brown Brothers Harriman in New York.
Chancellor Alistair Darling will publish a letter today to lawmakers on the Treasury Committee overseeing economic policy about how he plans to change the mandate of the Bank of England. Later, the Treasury will issue a consultation document seeking feedback from industry and lobby groups about the changes. The central bank, which in 1997 won the authority to set interest rates, will have a more specific mandate for assessing threats to the economy through its analysis of financial stability. That will require new legislation that Darling plans to introduce into Parliament by the end of next month.
The Swiss central bank has left its main lending rate unchanged at 9:30 a.m. local time as slowing growth limits policy makers' room to combat inflation. The Swiss franc rose to the highest since 1991 against the yen as the central bank left its interest rates unchanged at a six-year high today. USD/CHF is currently trading at 1.0379 as of 7:55 am, GMT.
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