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Dollar rebounds after euro terror threat { March 19 2008 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/19/AR2008031902886.htmlhttp://www.washingtonpost.com/wp-dyn/content/article/2008/03/19/AR2008031902886.html
Bin Laden threatens grave punishment over cartoons
Reuters
Wednesday, March 19, 2008; 6:15 PM
DUBAI (Reuters) - Al Qaeda leader Osama bin Laden threatened the European Union with grave punishment over the re-publication of cartoons of Islam's Prophet Mohammad that Muslims saw as offensive.
Bin Laden in an audio recording posted on the Internet said that the drawings which were published by Danish and other newspapers were part of a "crusade" in which the Catholic Pope was involved.
(Reporting by Inal Ersan)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQ3RiMAGzeR8&refer=home
Dollar Rises Against Euro, Yen as Oil, Commodity Prices Decline
By Agnes Lovasz
March 20 (Bloomberg) -- The dollar rose to its strongest in a week against the euro as speculation a global economic slowdown will reduce demand for raw materials pushed gold and oil lower.
Europe's common currency declined after Credit Suisse Group said it may have a loss this quarter because of writedowns on debt securities. The dollar climbed to the highest level in more than a week versus the currencies of its major trade partners as crude, which is priced in the U.S. currency, dropped after a government report showed weaker demand for fuel.
``The main driver is the liquidation of long commodity positions, specifically crude oil,'' said Lee Hardman, a currency strategist in London at Bank of Tokyo-Mitsubishi UFJ Ltd. ``That's potentially been a positive for the dollar on the back of the drop in commodity prices.''
The dollar advanced to $1.5443 per euro as of 7:55 a.m. in New York, the strongest since March 12, from $1.5626 yesterday. It gained to 99.66 yen, from 99.03 yesterday. The European common currency weakened to 153.87 yen from 154.80.
The U.S. Dollar Index traded on ICE Futures in New York, which compares the currency to those of six trading partners, rose for a third day, to 72.76, the highest since March 12, from 72.144 yesterday. The gauge fell to a record 70.698 on March 17, when the dollar slumped to $1.5903 per euro, the lowest level since the European currency's debut in 1999.
The dollar may rise to $1.5280 per euro in coming weeks, where it will meet resistance, a level where sell orders may be clustered, Hardman forecast. He predicts the U.S. currency to resume its drop, to $1.60 per euro, citing a ``continued erosion of the dollar's yield advantage'' as the Federal Reserve keeps cutting interest rates.
Gold Slumps
Gold headed for its biggest weekly drop in 25 years, plunging 12 percent from its record $1,032.70 an ounce. Oil fell below $100 a barrel for the first time since March 5, and copper had its biggest two-day decline in seven months.
The euro also weakened after a report showed today growth in Europe's service and manufacturing industries slowed more than economists forecast.
A preliminary estimate of Royal Bank of Scotland Group Plc's composite index fell to 51.9 in March, from 52.8 in February, Reuters Plc reported. Economists expected 52.4, according to the median of 14 forecasts in a Bloomberg News survey. A reading above 50 indicates expansion.
The single European currency declined after European Central Bank council members Yves Mersch and Guy Quaden said yesterday financial-market turbulence caused by the U.S. housing slump will last longer than expected, weighing on Europe's economy.
U.S. Influence
``The weakness in the U.S. will be felt in the euro zone and by the third quarter we are expecting the ECB will be cutting rates,'' said Tim Condon, head of Asia research at ING Groep NV in Singapore, a unit of the biggest Dutch financial-services company. ``Right now, the markets are very bearish on the U.S. and less bearish on the euro, but as time passes, that is going to change.''
ECB policy makers have refrained from cutting borrowing costs as they weigh the risk of slowing growth against accelerating inflation. Investors still expect at least one reduction in the 4 percent benchmark rate this year, futures trading shows.
A technical gauge that had in recent weeks indicated the euro may have risen too far and too fast against the dollar fell below the level that signals a reversal for the first time since Feb. 26. The Relative Strength Index was at 62 today, from 75 yesterday. The 70 level indicates a currency may be overbought.
Credit Suisse
The Swiss franc declined against the dollar and the euro after Zurich-based Credit Suisse said writedowns of $2.65 billion, caused by deliberate mispricing by traders, will be spread over the fourth quarter and first three months of 2008.
The franc traded at 1.5651 per euro, from 1.5595 yesterday. Against the dollar, it declined to as low as 1.0168, the weakest since March 13, from 0.9982 yesterday.
The pound surged against the euro after a government report showed retail sales in Europe's second-biggest economy rose more than forecast last month. Retail sales increased an annual 5.5 percent, compared with an increase of 3.6 percent anticipated by economists in a Bloomberg News survey.
The U.K. currency rose to 77.92 pence per euro, from 78.76 pence yesterday and compared with a record low of 79.12 on March 17. It traded at $1.9819, from $1.9843.
Iceland's Krona Rebounds
The Icelandic krona rebounded after slumping to a record low against the euro yesterday as risk-averse investors sold higher- yielding assets and widening losses at financial services companies pushed up the cost of insuring the country's banks against default. Iceland's key interest rate of 13.75 percent is the second-highest in the developed world.
Iceland's currency traded at 121.599 per euro, from 122.0864 yesterday, when it plunged to a record 127.985 per euro. It extended its decline against the dollar, dropping 0.8 percent to 78.74, from 78.12 yesterday, when it touched 81.61, the weakest level since September 2003.
Traders may also be reducing bets that the dollar will decline in case of large currency swings during the Easter vacation, said Daniel Katzive, a New York-based currency strategist at Credit Suisse Group, in an interview on Bloomberg radio today.
``We think that the dollar is benefiting from profit-taking on profitable shorts heading into the long weekend but we don't think it marks a turning point for the dollar beyond the very short term,'' Katzive said. ``Fed policy is very accommodative. While U.S. yields remain low relative to the rest of the industrial world the dollar is going to struggle to recover.''
Futures on the Chicago Board of Trade indicate a 54 percent chance the U.S. central bank will cut its rate by another half point by its June meeting. The odds of a quarter-point cut in April were 38 percent.
Last Updated: March 20, 2008 07:59 EDT
http://www.reuters.com/article/latestCrisis/idUSL21557182
Car bomb explodes in N.Spain after ETA warning-media
Fri Mar 21, 2008 10:01am EDT
(Adds background, details)
MADRID, March 21 (Reuters) - A car bomb exploded on Friday close to a Guardia Civil police station in Calahorra, a town in the Rioja region of northern Spain, after a warning from the Basque separatist group ETA, Spanish media reported.
The media reported no serious injuries but said the bomb warning had disrupted a Holy Week procession and some people, including a policeman, may have been slightly hurt by flying glass.
State radio said ETA had issued a warning stating the location of the bomb and the make, model and colour of the car.
Media reported the police station and surrounding area had been cleared and cordoned off before the explosion.
State television said the warning had been received about 30 minutes before the explosion and there had been scenes of panic as the area around the police station was crowded with people attending a Holy Week religious procession.
Spanish authorities blamed ETA for the death on March 7, two days before the general election, of former Socialist Party councillor Isaias Carrasco, shot dead in the Basque town of Mondragon.
ETA has killed more than 800 people in four decades in its fight for independence for the Basque Country in northern Spain and southern France, though polls show most Basques do not want this. (Reporting by Joe Ortiz; Editing by Tim Pearce)
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