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Dollar mixed in calm holiday trade
October 13, 2009
New York - The dollar traded mixed on Monday in subdued trade on holidays in Tokyo and New York, amid strong gains in other markets that highlighted growing investor risk appetite.
The euro rose to 1.4771 dollars at 2100 GMT from 1.4727 dollars late in New York on Friday.
The dollar edged up to 89.85 yen from 89.32 yen on Friday.
Trading was quiet with bank holidays in the United States, Canada and Japan.
Boris Schlossberg at Global Forex Trading said the greenback "started the week on bullish note" on the back of "hawkish comments" from St Louis Federal Reserve President James Bullard and some downbeat news from Europe.
Bullard suggested that inflation may be a greater concern than the market believes, according to Schlossberg. But he added that inflation pressures are "essentially non-existent" and that Fed officials appear to making efforts to "jawbone" the dollar higher by hinting at a hike in rates.
"With few tools left at their disposal, US monetary authorities have resorted to rhetoric as their prime method of slowing down the buck's descent," he said.
Rod Smyth at Riverfront Investment Group said the Fed is still flooding the market with dollars, making it hard to increase the value of the greenback.
"As long as the Federal Reserve continues to print money, we think the dollar will weaken and risk assets around the world will benefit," he said.
"Short-term interest rates are near zero and the Fed is likely to print an additional half-trillion dollars between now and the end of 2010."
The US currency had come under pressure recently from
speculation that the United States would be slower to tighten monetary policy than other central banks.
The Fed cut interest rates to virtually zero percent last
December to help jolt the economy out of its worst recession in decades.
Elsewhere on Monday, the British pound slumped to multi-month lows versus the euro and the dollar as investors assessed the economic outlook, despite the London stock market striking its highest level for more than a year.
Sterling slumped as a consultancy forecast that the Bank of England, the central bank, would keep British interest rates at a record low 0.50 percent until 2011.
In late New York trade, the dollar stood at 1.0267 Swiss francs from 1.0311 Friday.
The pound was at 1.5799 dollars after 1.5839. - Sapa-AFP
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