The U.S. Dollar rose broadly in early London trading today, helped by a drop in commodity-linked currencies on the rumor that lending institutions in China may have been advised to curb their lending activities, which would effectively slow the fast pace of the Chinese economic recovery. The single currency Euro was hard hit against the greenback; as reported at 8:43 a.m. (GMT), it was trading at $1.4185, a decline of .8%. One analyst suggested that if the Euro drops further, say below the middle $1.41 range, it may spark investor profit taking. At one point in the day’s trading, the Euro had fallen to $1.4166, the lowest price in more than 5 months. Through this trading week, the Euro has slipped nearly 1% versus the greenback, but many market players believe that the pace of losses should slow soon.
Also getting hit hard against the U.S. Dollar was the New Zealand currency, which slipped to $0.72353, a decline of almost 2%, and a new 3-week trough. The Kiwi’s decline is attributed to the report out of China about bank lending curtailment, and the release of recent data from the New Zealand government which showed that inflationary pressures were easing, indicating that the possibility of an interest rate hike is diminishing.
