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FX round-up: Dollar suffers as commodities soar

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Date: Monday 30 Jun 2008

LONDON (ShareCast) - The dollar eased against the euro and the yen Friday, amid soaring commodity prices, disappointment over the Fed’s decision to keep interest on hold and dwindling prospects of higher interest rates in the short term.

Concern about inflation had dollar investors heading for the door and instead tucked into commodities such as gold and oil.

Analysts say an increase in interest rates would help boost the greenback but market onlookers are now predicting that won’t happen till perhaps next year.

Speculation that the European Central Bank will try and rein in inflation with a July rate hike fuelled demand for the euro.

The pound edged higher versus the dollar on Friday although pressures remain on the currency amid concern about UK inflation and weak economic data.

Figures out Friday from the Office for National Statistics said quarterly GDP rose by 0.3%, revised down from 0.4%, the weakest rate in 3 years.

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