Monday, January 25, 2010

Dollar mixed with eyes on Obama, Bernanke


The dollar traded mixed against it main rivals on Monday as investors await a Federal Reserve policy meeting and a key speech by US President Barack Obama this week.

In London morning deals, the euro rose to 1.4150 dollars from 1.4135 late in New York on Friday.

Against the Japanese unit, the dollar climbed to 90.27 yen from 89.91 yen late on Friday.

Investors were cautious ahead of the Fed's two-day monetary policy meeting starting Tuesday, followed a day later by Obama's State of the Union speech, which comes amid concern about his tough banking reform plan.

Any traders taking a positive view of the dollar's prospects will be looking for signs in Obama's speech that the US government "is serious about cutting the burgeoning budget deficit", Calyon analysts wrote in a note.

The market was also grappling with doubts about the future of Fed chairman Ben Bernanke after key Democratic senators said last week they would oppose the central bank chief's reappointment after his first term ends on January 31.

Top-ranking members of the US Senate banking committee, however, voiced confidence Saturday that the Fed chief would be confirmed for a second term.

Markets were also eyeing US housing data, durable goods orders and fourth-quarter gross domestic product (GDP) figures due out later this week.

Analysts said the greenback will likely be weighed down against regional currencies this week due to expectations that some central banks in Asia will hike interest rates ahead of their counterparts in many developed economies.

Elsewhere, the British pound rose on the eve of official data widely expected to reveal an end to Britain's longest recession on record.

The Office for National Statistics will on Tuesday publish data likely to reveal that Britain exited recession in the fourth quarter of 2009, analysts have forecast.

A return to growth between October and December last year after six quarters of negative output will see Britain following all other major economies out of recession. Economists predict growth of 0.4 percent in the fourth quarter.

In London on Monday, the euro was changing hands at 1.4150 dollars against 1.4135 dollars late on Friday, 127.75 yen (127.03), 0.8756 pounds (0.8767) and 1.4731 Swiss francs (1.4723).

The dollar stood at 90.27 yen (89.91) and 1.0411 Swiss francs (1.0416).

The pound was at 1.6158 dollars (1.6115).

On the London Bullion Market, the price of gold rose to 1,110.27 dollars an ounce from 1,084 dollars on Friday.

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