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Dollar rally against euro and yen Dollar rally against euro and yen
(about 3 hours later)
The US dollar has risen to a one-week high against the euro and also climbed against the yen.The US dollar has risen to a one-week high against the euro and also climbed against the yen.
The Federal Reserve interest rate cut has helped restore some confidence in the US economy, and provide some support for the greenback. Analysts said the sharp drop in oil, gold and other commodity prices helped boost the dollar, as investors switched money back into the US currency.
And analysts say the fact traders have rushed to cash in record-high commodity prices before the long weekend may be giving the dollar a boost. At 1612 GMT it took just $1.5421 to buy one euro, a recovery for the dollar from the $1.59 level on Monday.
One euro bought $1.543 from $1.5613 on Wednesday, from a $1.59 high on Monday. Meanwhile, one dollar bought 98.78 yen, above its 12-year low of 95.77 set on Tuesday. A pound buys $1.9823.
Meanwhile one dollar bought 99.29 yen, above its 12-year low of 95.77 set on Tuesday. James Hughes at CMC Markets in London said the dollar's rise was also helped by the three-quarters of a percentage point rate cut earlier this week.
James Hughes at CMC Markets in London said the dollar's rise was helped by the three-quarters of a percent rate cut earlier this week.
But he said markets were aware more rate cuts could weaken the dollar and push the euro back upward.
He said the "smaller-than-expected rate cut" had "helped lend some support to the greenback over the past 36 hours."He said the "smaller-than-expected rate cut" had "helped lend some support to the greenback over the past 36 hours."
But he added: "Consensus remains that further softening of monetary policy will be seen in the US, and this sentiment could well initiate a resumption of selling pressures on the dollar as we approach the weekend break." But he added: "Consensus remains that further softening of monetary policy will be seen in the US, and this sentiment could well initiate a resumption of selling pressures on the dollar."
Meanwhile the dollar rallied to its strongest price against the euro of the week, as investors cut exposure to commodities. Meanwhile, the dollar rallied to its strongest price against the euro of the week, as investors cut exposure to commodities.
"Commodity markets and currencies are very interconnected and as we see the system deleverage positions in oil and gold, the dollar is bouncing back," said Camilla Sutton, a currency strategist at Scotia Capital in Toronto."Commodity markets and currencies are very interconnected and as we see the system deleverage positions in oil and gold, the dollar is bouncing back," said Camilla Sutton, a currency strategist at Scotia Capital in Toronto.
But some analysts think the dollar's recovery could be short-lived.But some analysts think the dollar's recovery could be short-lived.
"The Fed still needs to cut rates. I'm not convinced that the bottom for the dollar has occurred," said Richard Grace, chief currency strategist with the Commonwealth Bank of Australia."The Fed still needs to cut rates. I'm not convinced that the bottom for the dollar has occurred," said Richard Grace, chief currency strategist with the Commonwealth Bank of Australia.
The pound also recovered against the euro, with a euro buying 78 pence on the money markets.The pound also recovered against the euro, with a euro buying 78 pence on the money markets.