Today euro reached a new record high value against the Great Britain pound after the real estate market of the United Kingdom brought even more negative news thus increasing the chances for the Bank of England to cut the interest rate in January or February 2008.
The median U.S. dollar gain versus euro, estimated by the foreign exchange market experts for the next year, is 3.5%. The dollar is believed to gain strength in 2008 after two years of a pretty fast decline and hitting the historical minimums against several major world currencies.
The euro rose against all other major currencies today spurred by the carry trading optimism and weakness experienced by the Great Britain pound and the U.S. dollar.
European Central Bank published its scheduled Monetary policy decisions today, leaving the main refinancing operations interest rate at 4.00%. Jean-Claude Trichet, Central Bank President, commented this decision saying that ECB is ready to fight the pressure of the rising inflation.
October consumer prices inflation report added some new troubles for ECB to worry about as the released 2.6% CPI growth last month exceeded ECB’s target of 2.0%, while the economy growth is not performing at the pace that would allow another rate hike soon.
U.S. Dollar gained 0.5% against euro today after the Abu Dhabi government bought a $7.5 billion stake from Citigroup Inc. This sum will help Citi to recover from the recent subprime lending write-offs, as this bank announced surprisingly high losses from this kind of lending.
Dollar slid to its new historical bottom rate against euro hitting 1.4967 on EUR/USD. Missing the marvelous 1.5000 pint by about 30 pips, EUR/USD retraced by 150 points back as the Forex traders consolidated their profits on the rally. Another week without any supporting for dollar may probably break this resistance.