The U.S. currency is heading for its biggest weekly gain since March 2005 against the European currency as the dollar benefits both from past Bernanke’s statements and the current expectations for G8 meeting.
Many reasons stand behind such a fast dollar appreciation this week — among them Fed’s intention to raise the interest rate to fight the inflation and the Treasury Secretary Henry Paulson’s statement that the U.S. may buy out its currency on the Forex.
Consumer price index is also coming out in U.S. at 12:30 GMT today — the reading above the expected 0.5 percent gain will definitely push dollar farther up as the bullish expectations on the interest rate will prevail then.
The U. S. dollar has also its best week since February 1999 against the Japanese yen. Financial officials from Europe say that they are satisfied with the current dollar’s appreciation as it benefits their national exporting companies.
More investors become confident that the Federal Reserve’s next step will be increasing the interest rate. The only questions that they are asking is when and by how much.
Finance ministers from the Group of Eight nations are meeting today and tomorrow in Osaka, Japan to discuss the global problems. Some currency traders believe that the important statements regarding the U.S. dollar may be made there with a positive feedback for the greenback.
EUR/USD fell today from 1.5452 to 1.5401 with a daily low at 1.5386 as of 8:03 GMT. GBP/USD remained virtually unchanged today opening at 1.9455 with a close at 1.9447 so far; the daily low was at 1.9428. USD/JPY rose from 107.87 to 108.00 today.
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