Dollar hovers nears 2006 euro lows
http://www.forbes.com/markets/feeds/afx/2006/04/05/afx2647924.html
LONDON (AFX) - The dollar hovered near 10-week lows against
the euro as the yield factors that have supported the currency over the
last year or so continued to fade from view and structural concerns
returned to the fore.
Analysts said the recent economic data flow, including this morning's
purchasing managers index into the euro zone's services sector, has
reinforced expectations that the European Central Bank will raise
interest rates by more than the US Federal Reserve in the year ahead.
This view of a narrowing yield spread has helped the euro climb up to
1.2287 usd yesterday, its highest level since Jan 25.
The dollar has also came under pressure from reports that China's
central bank may diversify its foreign exchange reserves. Separately,
officials from Qatar also suggested that the nation may boost its euro
holdings.
'Market sentiment has turned savagely against the dollar,' said Steve
Pearson, currency strategist at HBOS.
'Increased chatter around the potential for Middle East reserve
manager sales of dollars, fears (ungrounded) of a change in
emphasis with regard to dollar policy should Treasury Secretary
John Snow step down, and more fundamentally, speculation that
tightening cycle in the euro zone and Japan will extend beyond
that in the US have provided excuses to sell the dollar,' he added.
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