17 Oct

Dollar stable following falls but expectations mixed

The dollar stabilised in early trading on Tuesday following falls on Monday as traders sought to cash in on the currency's gains over the past week.

The euro remained almost static over Monday at $1.25, following its four-month low of $1.24 on Friday, while the dollar traded at 119.05 yen.

Predictions on the coming movements of the dollar were mixed as analysts waited for US inflation and capital flow data due on Tuesday.

Initial signs have suggested that the US economy is maintaining economic pace better than expected, reducing expectations of a further interest rate cut early next year.

The US treasury will release figures for net capital inflows and foreign exchange purchases in August, with inflow predictions of $50 billion, up from $32.9 billion in July.

If the real figure is lower then traders may use the news as an excuse
to take profits on their dollar transactions, analysts said.