US dollar tumbles against the euro (page 2 of 2)

Range for the week: $ 1.1300 - $1.1800.


Japanese Yen

The yen hit multi-week lows testing 119.30 versus the dollar as weakness in Japanese stocks raised speculation that recent fund inflows to such shares might be slowing.

Japanese players sold the yen after U.S. Treasury Secretary John Snow said at the end of last week that he would not criticise Japan for intervening to weaken the yen.

However, the following day the dollar struggled to hold gains versus the yen as a rise in Japanese asset prices and negative comments on foreign exchange intervention eroded advances. The greenback eased against the yen on critical remarks from G-7 officials about Japan's massive currency intervention.

U.S. Treasury Secretary John Snow said that intervention in the foreign exchange markets should be kept to a minimum, " so a general policy of non-intervention makes sense". The market interpreted the comment as a retreat from his recent positive remarks about Japanese intervention.

Bank of Canada Governor David Dodge said that intervention was not necessarily the best use of Japan's resources when asked about the over 7 trillion yen Japan has spent so far this year to stem the yen's rise. Japan's Vice Finance Minister Zembei Mizoguchi, weighing in said Japan's foreign exchange interventions were aimed at stabilising the market, not at weakening the yen.

On the economic front, Japan's consumer price index fell for the 45th straight month in June, but with focus on the U.S. economic releases, the data barely registered. Next week, the dollar is expected to trade on a volatile note with an array of important U.S. economic releases likely to determine its trend.

Range for the week: 116.00 -121.00.


Sterling

Sterling remained under pressure over political uncertainty caused by the apparent suicide of a British former UN weapons inspector at the centre of a row over London's justification for the Iraq war.

Confirmation by British police that they had found the body of a scientist David Kelly helped push the pound to three month lows around $1.5780 levels. Adding on to the pound's woes, was the release of the CBI survey of trends in UK manufacturing which showed the total orders balance falling to the lowest level since January 1999 at negative 37 in July from negative 27 previously.

In addition, the minutes of this month's Bank of England meeting said sterling's rise since May could lower growth and inflation in the coming months. Towards the later part of the week, sterling bounced higher versus the dollar after buoyant British retail sales data eased talk of a further UK rate cut.

The pound jumped to one-week highs of $ 1.6200 levels after UK retail sales showed a rise of 1.9 pct in June from May, nearly five times stronger than the market had anticipated. But better than expected US weekly jobless claims bolstered the greenback across the board, leaving sterling trimming its gains.

UK data out next week include June consumer credit figures on Tuesday, while surveys on retail and consumer sentiment are due on Wednesday and manufacturing on Friday.

Range for the week: $ 1.5900 - $ 1.6400.