Will the weak Dollar remain under pressure this year?
*Bloomberg, by Deborah Finestone, August 15, 2006
Dollar Has Biggest Drop in Three Weeks; Producer Prices Trail Forecasts
“The dollar dropped the most in almost three weeks against the euro and yen after a government report on wholesale prices boosted speculation that the Federal Reserve is finished with its two-year cycle of interest-rate increases.
The U.S. currency also declined against the British pound, Swiss franc and New Zealand dollar after the report showed prices paid to U.S. producers excluding food and energy unexpectedly fell last month.
The report “lowered expectations for the Fed’s September meeting and maybe subsequent ones,” said Tim Mazanec, senior foreign exchange strategist at Boston-based Investors Bank & Trust Co. “Sentiment is so negative on the dollar, that’s not going to change this year. It’s going to remain under pressure.”
The dollar weakened to 115.93 yen at 11:38 a.m. in New York, from 116.71 late yesterday. It declined to $1.2794 per euro, from $1.2715.
A separate government report showed international investors in June unexpectedly increased purchases of U.S. financial assets.
The dollar is down about 7.4 percent against the euro and 1.5 percent versus the yen this year on expectations central banks in Japan and Europe will outpace the Fed in lifting rates. “
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