Dollar Advances On News That Europe's Economy Will Slow Faster

Daily Forex Fundamentals | Written by Finotec Group | Sep 11 08 09:06 GMT |

The greenback rose to a one-year high against the euro on speculation that Europe's economy will slow more than in the U.S., prompting the region's central bank ECB to cut interest rates. The U.S. currency climbed for a second day as traders increased bets on a European Central Bank rate reduction before a government report tomorrow that economists say will show industrial production in the euro area shrank. 'The overall drivers of the foreign-exchange markets are positive for the U.S. dollar,' said Sue Trinh, a currency strategist at RBC Capital Markets in Sydney. 'Markets have been driven by a narrowing in the expectations of the growth differential between the U.S. and the rest of the world.' The EUR/USD is currently trading at $1.3940 as of 7:38am, GMT. The U.K. currency climbed against the euro yesterday as Bank of England Deputy Governor John Gieve was quoted in the Irish News as saying inflation may accelerate. Central bank policy makers kept interest rates at 5 percent for a fifth month on Sept. 4 as inflation risks prevented them from cutting borrowing costs to spur growth. The bank is due to release the minutes of the meeting Sept. 17. The sterling advanced for a sixth day against the euro, the longest run of gains in 20 months, and fell for a second session versus the dollar. The GBP/USD is currently trading at $1.7516 as of 7:55am, GMT. The U.S Federal Reserve may increase the cash it provides to banks and brokers by cutting the interest rate even further to 1.5% and possibly 1% , already a record, to help them balance their books at the end of the year. Six bank failures in the past two months and rising concern about Lehman Brothers Holdings Inc.'s capital levels pushed lenders' borrowing costs to near a four-month high yesterday. 'This could be the mother of year-ends,' said Brian Sack, vice president of Macroeconomic Advisers LLC in Washington, who used to serve as head of monetary and financial market analysis at the Fed. 'The markets will need extraordinary actions to get through it.' Economic Calendar Time Country Event Period Previous Forecast Significance 23:50 GDP q/q JPY Quarterly -0.6% -0.9% ** 22:45 Core Retail Sales m/m NZD 0.0% 0.2% *** 22:45 Retail Sales m/m NZD 0.9% -0.3% *** 18:00 ECB President Trichet Speaks EUR ** 12:30 Trade Balance CAD Jul 5.8B 5.6B *** 12:30 Trade Balance USD Aug 56.8B 58.0B *** 12:30 Import Price Index m/m USD Aug 1.7% -1.8% ** 12:30 Unemployment Claims USD Weekly 444.0K 440.0K ** 06:45 Payrolls EUR Quarterly 0.4% ** 06:00 WPI m/m EUR Aug 1.4% -0.6% ** 01:30 Employment Change AUD 10.9K 5.5K *** 01:30 Unemployment Rate AUD 4.3% 4.4% *** Finotec Group Inc. http://www.finotec.com/ Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.