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About GAIN: News & Events |
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Dollar up in Asia ahead of Greenspan
Investors.com, March 2, 2005
TOKYO (MarketWatch) - The dollar was carried higher early Wednesday by optimism that Fed Chief Alan Greenspan will emphasize the need for further interest rate increases when he appears Wednesday before the U.S. House of Representatives Budget Committee.
The U.S. currency also drew support from hopes that the U.S. non-farm payroll report for February will show strong jobs growth when it is released Friday, according to Brian Dolan, director of currency research for Gain Capital.
The euro stood at $1.3102, off 0.5 percent on the session, while the dollar rose 0.4 percent to 104.85 yen.
Dolan said investors expect Greenspan to continue to tout the need for measured interest rate increases. The Fed chief is also scheduled to testify Thursday at a White House tax reform commission.
Dolan said optimism about strong domestic jobs growth last month was fueled by several weeks of lower initial jobless claims and an increase in help-wanted advertisements in some regions.
The average forecast of economists surveyed by MarketWatch is for the creation of 221,000 new jobs, following an addition of 146,000 jobs in January. But Dolan said his firm expects the February new-jobs tally to reach 225,000.
Analysts said the market is focused to an unusual degree on the monthly unemployment report as anemic jobs growth has weighed down the dollar in recent months.
In European trading, the euro was weakened by news the European Central Bank reduced its growth forecast for the euro-zone.
The ECB cut forecasts to 1.6 percent from 1.9 percent for 2005, and to 2.1 percent from 2.2 percent for 2006. The bank forecasts 2.3 percent growth in 2007.
Aussie growth slows
Earlier, the Australian dollar was dented against its U.S. counterpart, despite an interest rate increase in that country, as gross domestic product data was lower than expected.
The Australian dollar was at 78.11 U.S. cents, compared with 78.85 cents Tuesday in Sydney.
Data released Wednesday by the Australian Bureau of Statistics showed growth slowed in the fourth quarter.
Gross domestic product in the quarter through December rose a seasonally adjusted 0.1 percent from the previous quarter and was up 1.5 percent from a year earlier.
Economists had forecast fourth-quarter growth at about 0.5 percent for the quarter, and 2 percent for the year, according to AFX-Asia. But a drag from net exports offset unexpectedly strong business investment.
On Wednesday, the Reserve Bank of Australia's policy board raised the overnight cash rate target to a four-year high of 5.5 percent, to reduce inflation risks. The move was as expected by 20 of 21 economists surveyed by Bloomberg News.
"Despite a slow down in the economy, the national account's price measures showed accelerating inflation. The combination of slowing economic growth, rising inflation, and RBA tightening raises caution over the economic outlook," J.P. Morgan analysts said in a research report.
"Today's tightening creates further downside risks to our bottom of the consensus 2005 GDP growth forecast" of 2.5 percent, they said.
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Overview