Financial markets around the world are focusing their attention on the euro. With the downtrend in its value continuing unabated, the single European currency has hit life-time lows repeatedly in recent weeks.
There is speculation that European monetary authorities will intervene to prop up the ailing currency. Early last month the Bank of Japan stepped in to keep the yen from rising.
The dollar opened this month higher, recouping much of its recent losses against the yen, but it is unlikely this rise will go unchecked.
Hedge selling by Japanese exporters could keep the dollar from gaining further ground. Their in-house arbitrage exchange rates converge around 105 yen.
The stronger-than-expected U.S. jobs data for April have raised fears of higher U.S. interest rates. It is now considered a foregone conclusion that the Federal Reserve's policy-setting Federal Open Market Committee will decide to raise key interest rates at its meeting set for Tuesday.
Still, Wall Street has reacted calmly to the jobs data, helping to shore up the dollar.
U.S. interest rate hikes of 25 to 50 basis points have apparently been factored into the dollar's value.
Still, it remains anybody's guess how the U.S. financial markets will react to the outcome of next week's meeting.
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