Home »Money and Banking » World » Dollar edges up against euro

The dollar gained a little ground against the euro on Friday ahead of a long weekend in the US, with the focus on this week's testimony from Federal Reserve chairman Alan Greenspan. Greenspan testified before congressional committees on Wednesday and Thursday, reinforcing expectations that US interest rates had further room to rise. But the testimony gave the dollar little support, with investors torn between following strong US economic data and worrying about long-term damage to the dollar from the US current account deficit.

"The market is still digesting the comments from Greenspan and is treading water ahead of the weekend, ready to start afresh next week," said Kamal Sharma, currency strategist at Dresdner Kleinwort Wasserstein.

The dollar strengthened a third of percent on the day to $1.3025 per euro, above Thursday's two-week low of $1.3089 but 1-1/2 cents below the week's opening levels.

The yen steadied against the dollar at 105.58 yen, paring earlier gains, but rose a quarter percent against the euro.

The yen hit six-week lows against the euro on Thursday on dimming expectations of a near-term revaluation of China's yuan, with a revaluation seen having a knock-on strengthening effect on other Asian currencies.

United States markets are shut on Monday for the President's Day holiday.

US data releases on Friday included producer prices for January at 1330 GMT, forecast up 0.2 percent on the month, and the University of Michigan's preliminary consumer sentiment index reading for February, due at 1445 GMT. The index is seen steady at 95.5.

In Europe, gross domestic product data showed the French economy growing 0.8 percent in the fourth quarter and consumer spending posted its highest quarterly rise in almost four years. Euro zone industrial output was up 0.5 percent on the month in December, below forecast.

The dollar hit a three-month high against the euro earlier this month after hopes for gradual interest rate hikes in the US lifted the greenback from December's record lows versus the European currency.

But analysts have mixed views about the dollar's near-term direction, depending on whether their focus is on current account imbalances or economic fundamentals.

Copyright Reuters, 2005


the author

Top
Close
Close