The US dollar reached its lowest in three weeks on Wednesday’s trading session as the single currency strengthened on the expectations of interest rate hike by European Central Bank to handle the euro zone’s sovereign debt problems.
Moreover ECB president Jean-Claude Trichet also emphasized on measures to find a solution for euro zone’s macro economic imbalances in a recent statement.
The dollar index DXY which measures the US dollar’s performance versus its six major counterpart currencies declined to 77.373 on Wednesday as compared to 77.784 on Tuesday’s North American trading session.
The Euro surged to 1.3749 yesterday against the US dollar as compared to 1.3661 on late Tuesday. The British Pound also gained versus the greenback to 1.6211 as compared to 1.6141 on Tuesday.
The minutes of monetary policy meeting from BOE which was released earlier this month showed that its major officials were in favor of increase in interest rates. Currency strategist David Song from DailyFX commented, “There could be a growing shift within the BoE, with the committee continuing to show a greater willingness to gradually normalize monetary policy later this year, the central bank may see scope to lift the key rate … in the first half of 2011 in an effort to curb the risk for inflation.”
The US dollar also declined versus the Japanese yen to 82.46 on Wednesday as compared to 82.74 on Tuesday’s late trading session.
The New Zealand dollar further declined versus the greenback as decrease in interest rates is expected in by the New Zealand’s central bank in reaction to the recent earthquake.
The Australian dollar gained 0.4 percent against the New Zealand currency to 1.3413 in yesterday’s session while the greenback traded at 1.3408 versus the New Zealand dollar.
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Daily forex trading news written by Rehan from DailyForexTrade.com
