Euro lower on interest rate speculation (page 2 of 2)

Traders said Japanese intervention was almost the only factor dampening the yen. Market sources said that Japanese authorities, acting through the Bank of Japan, were suspected of intervening intermittently in the foreign exchange market, selling the yen and buying dollars.

Japan's top financial diplomat, Zembei Mizoguchi, warned again that Tokyo's foreign exchange policy was unchanged and in line with a stance agreed by the G7 finance ministers.

The yen continued its move upwards after data showed spending by the Japanese households rose for the fourth consecutive month in February and retail sales were also higher, suggesting Japan's export-led recovery might be trickling down to consumers.

In the coming week, Japan's tankan survey, which is expected to show that business sentiment in the world's second largest economy is gradually improving, will be of importance.

Range for the week: 104.00 - 109.00

Sterling

Sterling fell to a new one-week low of 1.7993 against the dollar, after Bank of England Governor Mervyn King pointed to the risk on UK growth from a strong pound.

A survey by the Confederation of British Industry showing UK factory order books improved for the fifth consecutive month in March to their best showing in three years offered little help as King's comments prompted investors to scale back expectations that UK interest rates are going to rise aggressively.

However, the trend soon reversed course and the pound gained momentum against the greenback on the back of a narrower than expected UK current account deficit, which helped offset concerns over currency strength raised by the Bank of England.

Sterling shot half a cent higher on the dollar in the immediate wake of news the fourth quarter current account deficit narrowed to 5.228 billion pounds from a downwardly revised third quarter shortfall of 6.28 billion.

Range for the week: $1.7800 -$1.8300.