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Euro lower at $1.4850 in European morning trade
11/05/09 01:10 ESTFRANKFURT -The euro was lower against the dollar Thursday though investors expected the European Central Bank to hold its main interest rate unchanged at 1 percent when it meets later Thursday, which should lend support to the euro.
The 16-nation euro bought $1.4850 in European morning trade, down from the $1.4888 late Wednesday in New York.
The British pound was also lower at $1.6523 from $1.6583, while the dollar fell to 90.44 Japanese yen from 90.74 yen late Wednesday in New York.
Investors expect the ECB to hold its main interest rate steady at 1 percent when it meets later Thursday.
Though at a historic low, the bank's rate is still higher than the Bank of England's and the U.S. Federal Reserve's which are both around zero percent.
The Fed held its rate at its Wednesday meeting and the Bank of England is also expected to leave rates unchanged when it too meets later Thursday.
Higher interest rates can support a currency as investors transfer funds in search of better returns, which should help the euro.
Investors have also been exiting the safety of the dollar for riskier bets as global stock markets have shown advances in recent weeks.
"The November ECB monetary policy meeting should culminate in the widely expected decision of keeping the main refinancing rate at 1 percent," Ideaglobal analysts said in a Thursday research note.
"No changes in terms of the non-standard monetary policy operations are on the cards. President Trichet's press conference should broadly echo the October (meeting)."
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Thus, media talk about the government’s failure to step in and force a desired Euro/$ rate is really no more than an expression of faith on the omnipotent power of the government. Given the serious dislocations of the world economy from the Fed keeping domestic rates too low for too long and contributing to the real estate bubble is an indication that all of the government’s economists together simply cannot match the performance of many private sector business analysts. What amazes me to no end is that the journalists completely ignore the Fed/Treasury’s statements in the 80’s that the foreign exchange market for US Dollars is so large as to be beyond control by the government authorities.
Thus, media talk about the government’s failure to step in and force a desired Euro/$ rate is really no more than an expression of faith on the omnipotent power of the government. Given the serious dislocations of the world economy from the Fed keeping domestic rates too low for too long and contributing to the real estate bubble is an indication that all of the government’s economists together simply cannot match the performance of many private sector business analysts. What amazes me to no end is that the journalists completely ignore the Fed/Treasury’s statements in the 80’s that the foreign exchange market for US Dollars is so large as to be beyond control by the government authorities.