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FX round-up: Dollar hangs on to gains

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Date: Thursday 21 Aug 2008

LONDON (ShareCast) - The dollar remained firm against major currencies Wednesday, snapping a two-day losing streak as oil prices wavered up and down throughout the session.

Gloomy data on Germany’s economy gave the greenback a boost as prospects of a rate cut in the eurozone increase.

The ZEW index, which measures economic sentiment, improved slightly but remained negative. It came in at negative 55.5 points from negative 63.9 points. Another German report showed the country’s wholesale inflation rate rose to 8.9% in July.

The two German reports took the focus away from a decline in US mortgage applications and a rise in US wholesale inflation.

The latest round of Japanese data has painted a bleak picture of the country’s economy and put the yen under pressure. Japan's all-industries index, which looks at economic activities, fell 0.9% in June from the month before.

Sterling also remained under pressure after minutes from the Bank of England's Monetary Policy Committee showed members are increasingly concerned about UK economic growth prospects.

A report from the central bank last week revealed it doesn’t expect the UK economy to grow at all over the next few years, but inflation should peak at 5% before falling next year.

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