The unstoppable euro broke through US$1.41 yesterday to a new high and drew renewed calls from French President Nicolas Sarkozy for the European Central Bank to follow the US Federal Reserve and cut interest rates.
Despite the worries of some exporters -- Airbus said if the euro keeps rising it may have to seek new cost savings -- ECB President Jean-Claude Trichet and German Chancellor Angela Merkel stood firm by their calls for the ECB to remain independent.
The currency used by 13 of the EU's countries, which have more than 317 million residents and account for more than 15 percent of global GDP, surged as high as US$1.4119 before falling back to US$1.4056 by afternoon, below the US$$1.4076 it bought in New York on Thursday.
In other trading, the US dollar slid to US$2.0139 against the British pound from US$2.0099 late Thursday. It rose slightly against the Japanese currency to ?115.61 from ?114.44.
The US dollar, which hit parity against the Canadian dollar on Thursday for the first time since 1976, rose slightly to C$1.0016.
Gold rose yesterday and held within striking distance of a 28-year high around US$738 an ounce as purchases from speculators helped the metal defy selling pressure.
Spot gold gained to US$735.40/US$736.20 from US$734.20/US$735.00 late in New York on Thursday, having fallen to an intraday low of US$732.30 an ounce as investors booked profits on a rally that has added more than US$90 an ounce in a little over a month.
Gold hit a peak of US$738.30 an ounce on Thursday -- its best level since January 1980 -- after the dollar tumbled to an all-time low against the euro and record highs crude oil ignited inflation concerns.
"At this point, we are seeing quite strong investor interest in gold," said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.
"If the US dollar continues to edge lower against other currencies, then I think you will see a continued support for gold," he said.
Gold is generally seen as a hedge against oil-led inflation.
The US dollar's slide this week came on the back of a decision by the US Federal Reserve to cut its benchmark rate by a bigger-than-expected half a percent to 4.75 percent, a response to market turbulence in the US and elsewhere in the fallout from the subprime mortgage crisis.
"Furthermore, there are widespread expectations that the Fed will trim interest rates further over the coming months," said Howard Archer, the chief UK and European economist for Global Insight. "In contrast, the European Central Bank still retains a clear bias toward raising interest rates further, despite shelving its original plans to act at its September meeting due to the current uncertainty and turmoil in global credit and financial markets."
Lower interest rates, while used to jump-start the economy, can also weaken a currency by giving investors less return on investments denominated in the currency.
The ECB kept its benchmark rate unchanged at 4 percent and the Bank of England is expected to keep its rate steady at 5.75 percent when it meets next month.
The strength of the euro is becoming a political issue, particularly in France, which has repeatedly demanded that the ECB ends its nearly two-year rate hike campaign.
"I don't criticize Trichet," Sarkozy told French television on Thursday.
"But I'm saying: look at what's going on," he said, adding "in the current economic situation, the Fed cuts rates, the ECB doesn't cut them."
Trichet said in a speech on Thursday night that independence is the cornerstone of the bank's monetary policy because it "allows the central bank to pursue its primary objective and to take full responsibility for its action."
Merkel reiterated her stance, saying "even the slightest hint" that the ECB was not independent could endanger the euro's stability.
COMPETITION: AMD, Intel and Qualcomm are unveiling new laptop and desktop parts in Las Vegas, arguing their technologies provide the best performance for AI workloads Advanced Micro Devices Inc (AMD), the second-biggest maker of computer processors, said its chips are to be used by Dell Technologies Inc for the first time in PCs sold to businesses. The chipmaker unveiled new processors it says would make AMD-based PCs the best at running artificial intelligence (AI) software. Dell has decided to use the chips in some of its computers aimed at business customers, AMD executives said at CES in Las Vegas on Monday. Dell’s embrace of AMD for corporate PCs — it already uses the chipmaker for consumer devices — is another blow for Intel Corp as the company
ADVANCED: Previously, Taiwanese chip companies were restricted from building overseas fabs with technology less than two generations behind domestic factories Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp, would no longer be restricted from investing in next-generation 2-nanometer chip production in the US, the Ministry of Economic Affairs said yesterday. However, the ministry added that the world’s biggest contract chipmaker would not be making any reckless decisions, given the weight of its up to US$30 billion investment. To safeguard Taiwan’s chip technology advantages, the government has barred local chipmakers from making chips using more advanced technologies at their overseas factories, in China particularly. Chipmakers were previously only allowed to produce chips using less advanced technologies, specifically
MediaTek Inc (聯發科) yesterday said it is teaming up with Nvidia Corp to develop a new chip for artificial intelligence (AI) supercomputers that uses architecture licensed from Arm Holdings PLC. The new product is targeting AI researchers, data scientists and students rather than the mass PC market, the company said. The announcement comes as MediaTek makes efforts to add AI capabilities to its Dimensity chips for smartphones and tablets, Genio family for the Internet of Things devices, Pentonic series of smart TVs, Kompanio line of Arm-based Chromebooks, along with the Dimensity auto platform for vehicles. MeidaTek, the world’s largest chip designer for smartphones
TECH PULL: Electronics heavyweights also attracted strong buying ahead of the CES, analysts said. Meanwhile, Asian markets were mixed amid Trump’s incoming presidency Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) shares yesterday closed at a new high in the wake of a rally among tech stocks on Wall Street on Friday, moving the TAIEX sharply higher by more than 600 points. TSMC, the most heavily weighted stock in the TAIEX, rose 4.65 percent to close at a new high of NT$1,125, boosting its market value to NT$29.17 trillion (US$888 billion) and contributing about 400 points to the TAIEX’s rise. The TAIEX ended up 639.41 points, or 2.79 percent, at 23,547.71. Turnover totaled NT$406.478 billion, Taiwan Stock Exchange data showed. The surge in TSMC follows a positive performance
RSS