The US dollar traded mostly higher Friday after data showed US capital inflows remained sufficient to finance the country's deficits, but the euro drifted up in positioning ahead of German elections.
The European single currency drifted up to US$1.2235 at 9pm GMT, compared with US$1.2221 late Thursday in New York.
The US dollar firmed to ¥111.34 from ¥110.64 on Thursday.
Figures from the US Treasury Department put capital inflows into the US during July at US$87.4 billion, well ahead of expectations of US$60 billion.
There was also a sizeable upward revision to July's inflows.
"The overall message is that funding for the US current account deficit remains ample for now," said Daragh Maher, senior FX strategist at CALYON.
The capital flows report offset a disappointing report on the US current account deficit, which dipped slightly in the second quarter to US$195.7 billion, but was higher than forecasts of US$193 billion, and the second highest on record.
The market also tried to guess the next move by the US central bank on interest rates, with most analysts seeing a rate hike.
The US Federal Reserve has raised interest rates 10 times since June last year to 3.50 percent, and until Hurricane Katrina struck late last month, was widely expected to raise its rate target again this month, in November and possibly in December as well.
"While a considerable amount of uncertainty surrounding monetary policy still remains, we continue to expect that the Federal Reserve will respond to still solid growth," said Gregor Bush at Bank of Montreal.
"This will keep the central bank removing monetary stimulus at a measured pace raising the fed funds rate to 3.75 percent at the September 20 meeting, to 4.00 percent by years end and, ultimately, to 4.50 percent by the fall of 2006."
Meanwhile, investors treaded carefully in the run-up to the weekend German general election, with opinion polls showing Chancellor Gerhard Schroeder's Social Democrats closing the gap on the Christian Democrats, led by Angela Merkel.
Investment had begun to flow into Germany on expectation that the Christian Democrats would win back power and embark on wide-ranging economic reforms.
Analysts said those inflows may slow down, or possibly go into reverse, should the outcome of the election be unclear.
"It looks as if there are more negative possibilities for the euro than positive outcomes and hence we'd not want to go into the election long of the euro," said Steve Barrow, currency strategist with Bear Stearns.
In late New York trade, the dollar edged up to 1.2691 Swiss francs from 1.2674 Thursday.
The pound was changing hands at US$1.8079 after US$1.8057 late Thursday.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to