NEW YORK, Dec 19- The U.S. dollar hit its highest level against major currencies in over 8-1/ 2 years on Friday on diverging monetary policy between the Federal Reserve and other major central banks, and bullish dollar positions heading into the end of the year. The euro hit a 28- month low against the greenback, while the dollar hovered near a 28- month high against...» Read More
The dollar rose to a one-month high against a basket of currencies Wednesday after reports showing robust job growth and productivity gains suggested a milder slowdown in the U.S. economy than many had thought.
With major central banks cutting rates right and left, the European Central Bank risks being the only one fighting the monetary-easing trend. But there seems to be no other option for the ECB.
Verbal intervention to try to stop the euro's advance is all that exporters will get for the moment, but if the going gets tough things may change, analysts say.
Selling in the financial sector bit into Tuesday's stock market performance and could do the same Wednesday. After the bell Tuesday, Fannie Mae announced that it was issuing $7 billion in preferred stock and chopping its dividend by 30 percent.
The yen rose against the dollar and higher-yielding currencies for a second day, with investors shying away from risky assets amid deepening concerns over the credit turmoil and tightening liquidity.
The yen gained broadly Monday as investors cut exposure to risky carry trades amid expectations of widening financial sector losses tied to the U.S. subprime mortgage market.
The dollar surged against a basket of major currencies Friday and was on track for its biggest weekly gain in more than a year on profit-taking in the euro and month-end squaring up of positions by corporates.
German retail sales posted their steepest decline in October since a value-added tax increase sent them plunging at the start of the year, in a sign that consumers are increasingly worried about higher energy and food prices.
The dollar rallied against most major currencies Thursday, buoyed by demand from U.S. corporations seeking to square their books by the end of the month.
The bad news that was scaring the markets has, for now, become the good news. Remember Monday. Things were dire. The major stock indexes were in a tailspin, sinking to a level 10% from October's highs, technically a correction. But that's all changed, and in part it's because the markets are now convinced the Fed recognizes what ails it.
The dollar rallied to one-week highs against the euro, the yen and the Swiss franc Wednesday with investors betting the U.S. currency's recent slump to multiyear lows had gone too far.
China could be moving in the direction advocated by Europe of a stronger yuan, European officials said. The ECB and the People's Bank of China would set up a working group at once to examine currency issues.
The euro's rise against the yuan is largely a reflection of a sharp drop in the dollar, and the European Union should look to Washington to resolve the problem, Chinese Premier Wen Jiabao said on Wednesday.
Consumer confidence in Germany fell for the fourth consecutive month despite the end-of-the-year holiday season, driven by fears surrounding the strong euro and high prices, according to a survey released Wednesday.
Tuesday's market action was the mirror opposite of Monday's mayhem. The Dow rose 215 points, or 1.69%. Money poured into the financial stocks. The credit markets calmed down, and 10-year Treasury futures traded near record volume but in a fairly tempered way. The dollar rallied. All this started with news Abu Dhabi Investment Authority was investing $7.5 billion in Citigroup.
The dollar rose against most major currencies Tuesday after Citigroup Inc. said it will sell a $7.5 billion stake to the Abu Dhabi government, restoring some confidence in battered U.S. banks.
China and the 13 countries using the single European currency agreed on Tuesday to cooperate to reduce global economic imbalances while heading off lurches in exchange rates.
The comments of Fed officials this week could be the balm the markets need, but they could just as easily prove to be the source of more anxiety.
The dollar was little changed against the euro and down against the yen Monday with investors finding few reasons to change their view that more Federal Reserve interest rate cuts are imminent.
French President Nicolas Sarkozy called publicly on Chinese President Hu Jintao to let the yuan rise more swiftly against the euro.