By Riva Froymovich
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The euro's rally against dollar hit the skids Friday in a technical reversal and ahead of key policy meetings next week.
Momentum traders began abandoning the euro after failing to break new ground in its sharp rally off the Federal Reserve's vote last week to start buying longer-term Treasurys. The dollar completely recovered its losses Friday. The euro fell to $1.3256, its lowest level since the decision.
Book clearing associated with the end of the first quarter and Japan's fiscal year, as longer-term money managers reevaluate portfolios, could extend this move into next week, say analysts.
Traders were also preparing Friday for the European Central Bank meeting and Group of 20 summit, both on Thursday.
Foreign exchange analysts widely expect the ECB to cut its refi rate down to 1.0%, and possibly announce unconventional, albeit less aggressive than the Fed, easing measures.
Analysts point to comments Thursday by ECB Vice President Lucas Papademos, who said the ECB could intervene in bond markets to help ease companies' financing problems, although they haven't yet decided to do so.
Additional comments by German Finance Minister Peer Steinbrueck mired the euro Friday as well.
He said that in order to maintain the euro's credibility, it will be important to stick to the European Union's Stability and Growth Pact, which demands countries keep their budget deficits below 3% of gross domestic product.
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