Dollar Growth Slows, SNB Left Rates Unchanged | IFCM
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Dollar Growth Slows, SNB Left Rates Unchanged - 16.3.2012

US Dollar The US currency weakened slightly yesterday against the majors after a considerable rally at the beginning of the week – the currency’s index fell from an almost 2-month high 80.62 to 80.03. Today markets are awaiting another series of macroeconomic data from the United States. After yesterday’s reports that showed unemployment benefits fell to a 4-year low and conditions improved in manufacturing sector, economists expect further improvements in consumer sentiment and factory output. Moreover another report is predicted to show the cost of living in the US increased in February from the previous month, as the CPI may have accelerated by 0.4%, staying at 2.9% in annual figures. Yesterday the Federal Reserve Bank of Richmond President Jeffrey Lacker said the US central bank may need to change monetary policy before 2014 to contain inflation as the economy accelerates. “My current assessment is that an increase in interest rates is likely to be necessary some time in 2013,” he said, according to the bank’s website. The current Fed’s pledge is to keep rates exceptionally low until late 2014. Euro The single currency strengthened somewhat against the greenback. After touching a 4-week low yesterday 1.3003, the euro recovered toward 1.3100. Yesterday the International Monetary Fund approved its part of bailout package for Greece of 28 billion euros with 1.65 billion euros available immediately. The rest will be distributed in equal tranches over a 4-year term, the IMF said. IMF Managing Director Christine Lagarde said in a statement that the new program “will enable Greece to address challenges” of a large competitiveness gap, a high level of public debt, and an undercapitalized banking system “while remaining in the Eurozone.” Swiss Franc The Swiss National Bank decided on Thursday to keep its target range for the three-month franc London interbank offered rate unchanged at 0%-0.25%. The bank also indicated it will maintain its pledge to defend the 1.20 franc-to-euro ceiling through buying foreign currency in unlimited quantities. “Even at the current rate, the Swiss franc is still high” the SNB said in its monetary policy statement. Finally, policy makers changed their forecast of inflation and GDP growth. The economy will expand at a rate close to 1% this year compared with a previous forecast of around 0.5%, while average annual consumer prices are expected to contract by 0.6% in 2012, compared with a contraction of 0.3% previously forecast. The euro weakened against the franc yesterday – the pair dropped from 1.2140 to 1.2064, maintaining a tight range in Asian trading hours. The dollar also fell from 0.9334 toward 0.9200 versus the Swissie.
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