News of sustained economic recovery may bolster chances of the Federal Reserve unwinding its emergency stimulus measures earlier than forecast
The US dollar was trading near a three-month high against the euro on Monday amid a growing view that the world's largest economy is well on its way to recovery. The greenback also got a boost from nagging credit concerns in Europe.
Further improvement of the US economic data may give an impetus to buy the dollar. News of sustained economic recovery may bolster chances of the Federal Reserve unwinding its emergency stimulus measures earlier than forecast.
The dollar traded at US$1.4345 per euro as of 2:33 p.m. in Tokyo from US$1.4349 in New York on Dec. 18 when it hit US$1.4262, the strongest level since Sept. 4. The yen was at 129.53 per euro from 129.75 last week. The US currency was at 90.30 yen from 90.49 yen in New York.
The euro was little changed at 1.4942 Swiss francs after touching 1.4909 francs on Dec. 18, the lowest since March 12.
The Dollar Index, which the ICE futures exchange uses to track the greenback against the euro, yen, pound, franc, Canadian dollar and Swedish krona, rose 1.6% to 77.821 last week, the biggest rally since the five days ended June 5. The index touched 78.141 on Dec. 18, the highest level since Sept. 4.
Credit concerns prevail in Europe after Greek had its ratings cut by first Fitch and then S&P. Moreover, the European Central Bank (ECB) last week raised its estimate by 13% for writedowns in countries using the common currency.
The ECB said that banks may have to write down an additional 187 billion euros (US$268bn) as loans to property companies and eastern European nations threaten the financial recovery.
Crude oil traded above US$73 per barrel in New York after rising 5% last week, the biggest weekly increase in two months. It was little changed at US$73.37 a barrel in after-hours electronic trading on the New York Merc at 12:00 p.m. Tokyo time.
Iraq said that Iran violated their shared border and called on the Islamic republic to withdraw its forces from an Iraqi oil well 280 miles (450 kilometers) south of Baghdad. Oil futures climbed as much as 2.8% on Friday.
Iranian troops withdrew from the disputed well in the East Maysan field after an armed confrontation, Iraqi government officials said yesterday. Iraq said that the Iranian flag was taken down from the well, though Iranian soldiers were still in Iraqi territory.
Gold bullion gained after the confrontation, citing geopolitical risks in the Middle East. Spot gold rose 0.2% to US$1,115.28 an ounce, after rising to as much as US$1,119.
