The dollar fell
broadly on Friday
as sagging stock markets and a jump in oil prices to a record high weighed on
the U.S.
currency, while fading risk demand boosted the low-yielding yen. Rate pared its loss versus the euro Friday after a Commerce Department
report showed the U.S. trade deficit narrowed more than forecast in
March as imports dropped by the most in more than six years.
The euro rose against the dollar today on speculation the ECB will keep
its benchmark rate at a six-year high of 4% in coming months to
curb price pressures.
Futures on the Chicago Board of Trade show a 78% chance the Fed
will hold its target lending rate at 2% at its next meeting on
June 25, down from an 82% chance yesterday. The balance of bets
is for a cut of a quarter- percentage point.
The euro added to gains after ECB President Jean-Claude Trichet said on Thursday that inflation remained his top concern, suggesting the bank may not cut interest rates soon. Inflation in Europe will stay high ``for a rather protracted period,'' Trichet said at a press conference yesterday following the ECB's decision to keep its main refinancing rate at 4 percent.
The euro recovered after falling to a two-month
trough below $1.53 as some investors expected Trichet to temper his tough talk
on inflation and focus on signs of slowing euro zone growth.
Sterling fell tor a third week against the dollar on speculation the Bank of England will add to three interest- rate cuts since December. Rate fell to a two-month low after the Bank of England kept interest rates on hold at 5% on Thursday.
The yen rose against the euro as concern credit- market losses are spreading hurt stocks and spurred investors to sell higher-yielding assets funded in Japanese currency. The yen was rose versus the dollar after American International Group Inc. said it needs $12.5 billion to offset subprime-related writedowns following two straight quarterly losses. Japan's currency has gained 2% against the euro and 2.2% against the dollar last week. The euro has increased 6 percent against the dollar this year and 0.1% for the week. It has dropped 3.3% against the U.S. currency since reaching a record high of $1.6019 on April 22.