Sun, Aug 20, 2006 - Page 10 News List

US dollar recovers against euro, but sags against yen

AFP AND CNA , NEW YORK AND TAIPEI

The US dollar recovered against the euro on Friday after a fall in the wake of weaker-than-expected US consumer confidence data proved short-lived.

The euro stood at US$1.2825 around 9pm GMT, unchanged from its level late on Thursday in New York. The greenback was down at ¥115.77, from ¥115.92, with the Japanese currency benefiting from China's decision to raise interest rates for the second time in less than four months.

The latest University of Michigan survey showed the headline consumer sentiment index fell sharply to 78.7 this month from 84.7 last month, well below analysts' expectations.

Standard Chartered currency analyst Marios Maratheftis said the data pushed the euro and the pound to the upper end of the day's ranges. When they were unable to break above that, however, the dollar moved back up again.

"This consolidation is likely to continue until the market is convinced that the Federal Reserve has finished hiking interest rates," he said, adding that currency trade remains rangebound at the moment.

He said the market was still pricing in a chance of over 50 percent that inflationary pressures will force the Fed to raise US rates again by the end of the year, after it recently called a halt to a long campaign of hikes.

The pound was particularly weak, falling to 15-day lows against both the dollar and the euro.

At 9pm GMT, the pound was worth US$1.8818, compared with US$1.8847 late on Thursday.

The US dollar was changing hands at 7.9745 yuan, against 7.9686 yuan on Thursday. It also bought 1.2331 Swiss francs, from SF1.2327.

The greenback rose against the new Taiwan dollar on the Taipei Foreign Exchange on Friday, gaining NT$0.04 to close at NT$32.667.

The US currency opened at the day's high of NT$32.725 and hit a low of NT$32.450.

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