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Forex - ECB?s Weber reopens speculation about interest rate increase despite FOMC suggestion for a Federal Reserve rate hike

The Dollar tumbled from six-month peaks against the Euro on Wednesday, as comments by European Central Bank official reopened speculation about an interest rate increase in the euro zone to fight persistent inflation pressure. ECB?s Weber told News agencies that any talk about lower interest rates in the euro zone was premature. He also gave the impression that if the euro zone economy improves toward the end of the year, there might even be scope for tightening. Economists expect the Federal Reserve to raise rates, although minutes of FOMC last meeting suggested that weak financial conditions and slow growth could prevent such a move. But the Dollar might be supported by a deteriorating global economy even as the Fed seems likely to keep rates on hold in the coming months.

Forex - Dollar rallied to a 6-month high on raising concerns of recession in euro-zone

The Dollar has extended its rally of the past month, touching a 2008 high against a basket of currencies on the view that economic weakness, once US, is spreading globally. A jump in US consumer confidence in August to 56.9 vs 51.9 added to the Dollar advance. US housing data had little impact on Dollar trading. And investor did focus later on the release of the minutes of the last FOMC meeting. The Ifo German business climate index for August fell more than expected to a three-year low of 94.8 vs 97.5, while German GDP contracted in Q2 for the first time since 2004. Ongoing worries that other countries are vulnerable to US economic weakness and views about the health of the financial services industry prompted investors to bail out of risky trades in higher-yielding currencies such as Australian and New Zealand Dollars.

Forex - Investors unwinding risks on lower US financial stocks

The Dollar dropped against the Yen on Monday, pressured by sharp losses in US equities as remaining credit worries forced investors to reduce risky trades. Dollar gained against the Euro and Sterling on views that declining growth in Euro-zone and United Kingdom could force their Central Banks to cut benchmark interest rates. Yesterday better-than-expected US existing home sales were little support to the Dollar as even a recovery in Housing market is seen as critical to easing some of the concern on the US economy. On Tuesday, currency investors will look at German Ifo data, US housing, US Consumer Confidence and minutes of last FOMC meeting for clues where the economy and interest rates are headed.