Posted on 12/23/2004, 1:58:25 PM by Jordi
NEW YORK, Dec 23 (Reuters) - The euro hit a record high against the dollar on Thursday after a mixed bag of U.S. reports on personal income, durable goods orders and jobless claims.
The euro rose to a record peak around $1.3483 according to Reuters data, from around $1.3460 shortly before the reports. That exceeded the euro's prior record peak of $1.3470 attained earlier this month.
U.S. personal income in November rose 0.3 percent, matching economists' forecasts. Weekly jobless claims were 333,000, up 17,000 from the previous week. Durable goods orders for November rose 1.6 percent, well above forecasts for a rise of 0.6 percent. Stripping out transportation orders, they fell 0.8 pct.
The 12-nation currency has risen sharply since September, when it was trading for around US$1.20, over persistent concerns about the ballooning U.S. trade and budget deficits.
The Commerce Department reported that consumer spending grew by a modest 0.2 percent in November, slightly weaker than the 0.3 percent that had been forecast by analysts and far short of the 0.8 percent reported for October.
At the same time, incomes grew 0.3 percent in November, more than the 0.2 percent that had been forecast. Still, income growth was weaker than in October, when it hit 0.6 percent.
Yeah, and when the Euro declines against the dollar, will it be as widely reported as the decline of oil prices? /sarcasm
Which leads me to this thought: If the Dollar so weak, why have oil prices declined so dramatically?
In other news, "French Aviation authorities suspect gravity played a key role in the distruction of a Concorde SST that caught fire during takeoff."
What a wonderful revenge against the Euro-weenies.
Too expensivde for US tourists..so 40 percent of their
tourist trade dries up. US goods now very cheap, so
our companies make out like gangbusters selling to Europe...
and European goods are too expensive for US budgets so
those markets shrivel.
``The U.S. government is happy to see the dollar fall,'' said Shahab Jalinoos, a currency strategist in London at ABN Amro Holding NV. ``The big surge in the euro versus the dollar will continue into next year.'' ABN forecasts the dollar will drop to $1.43 per euro and to 90 yen by the end of next year.
The U.S. currency has declined 6.4 percent against the euro and 3.1 percent versus the yen since the year began.
The U.S. currency is headed for a third consecutive annual decline, measured by the Federal Reserve's Trade-Weighted Major Currency Dollar Index. The last time it fell for three years in a row was during Ronald Reagan's second term when the Group of Seven negotiated the Plaza Accord in 1985 to weaken the dollar and the Louvre Accord two years later to stem its decline.
Merrill's Forecast
Merrill Lynch & Co., the top foreign exchange forecaster in the year ended Sept. 30 in Bloomberg Markets' annual rankings, doesn't expect the dollar to reverse course soon.
New York-based Merrill, the world's biggest securities firm measured by total shareholder equity, predicts the dollar will drop to $1.36 per euro by the end of 2005, said Yianos Kontopoulos, 33, London-based global head of currency strategy. The dollar will fall to 91 yen in the same period, he said.
Federal Reserve Chairman Alan Greenspan said on Nov. 19 that foreigners may tire of financing the record U.S. current account deficit and diversify into other currencies or demand higher U.S. interest rates. The dollar and U.S. Treasury securities fell.
A cheaper currency may help narrow the shortfall, which reached a record $164.7 billion in the third quarter, according to figures released on Dec. 16. Snow said in a speech on Nov. 17 in London that the deficit is a ``shared responsibility'' with other countries, which should boost economic growth.
The euro stayed higher after European Central Bank council member Guy Quaden said the currency's strength this year hasn't been ``too troublesome,'' Belgian magazine Tendances reported. ``The exchange rate has limited the effect of the increase in oil prices,'' he also said in an interview with the magazine.
I was listening carefully, because (a) I was interested and (b) my ideological NPR "gay-dar" was beeping as it detected a strong possibility of political agenda in the story.
The thing is, pretty much every one of the things that NPR cited as bad about the fall in the dollar were only bad from the point of view of other countries!. The only point they made that was not clearly good for America was this: that Russia was "thinking about" denominating the price of its oil exports in some currency other than dollars.
But this missed the point, I think. Isn't the dollar treated as a basic commodity, replacing gold metal in many cases, because the dollar is backed up by American physical security, and therefore, ultimately, by the might of the United States military? Isn't that (ultimately) why the Japanese buy our treasury bonds and our real estate, and why the British have bought the power distribution grid for most of the northeast?
The NPR story spoke darkly about how "some believe that the Bush administration has adopted a policy of benign neglect, and is content to let the dollar drift downward." But this is a good thing for us, isn't it? And might it not be the case that the Bush Administration has understands the real reasons why other nations rely on our currency, and, therefore, that all this gloom and doom talk about the dollar's fall is nothing but the usual nonsense spouted by pseudo-intellectuals who haven't had a single clue about anything for 25 years?
(steely)
If the dollar is a basic commodity, then it will keep on falling as long as we can see, since there's a great oversupply of it.
..."American physical security"... seem an hard concept to sell, after 9/11 and all the rethoric from worldwide terrorists, but I agree, it's still a strong argument.
"...by the might of the United States military?... unquestionable, but big creditor nations (China,Japan,Europe...) could see it as a peril form themselves,if the US fall to deeper in debt, since nobody could force the US to repay it.
Isn't that (ultimately) why the Japanese buy our treasury bonds and our real estate, and why the British have bought the power distribution grid for most of the northeast?
Foreigners are finding US assets terribly cheap by now, and they have to reinvest the oversupply of dollars they hold. A noticeable difference is that the US buy goods and services, that have an immediate value then fastly depreciate, while foreigners buy assets that yield an income : it's a continuous transfers of wealth outide the US.
One thing that has to be considered is that all currencies are losing their value as they are all printing new currency beyond their actual values. A race to the bottom is how this trade war is being waged. The dollar has the distinction of being the leader, thanks to our illustrious Fed Chairman and his cohorts in Congress and the administration.
Deficits
Trade deficits
Out of control spending
Massive national debt
------
Why is anyone surprised?
The over-valued Euro has not only made Europe too expensive for Americans and the rest of the world, it has also made Europe too expensive for the Europeans themselves.
We went to Spain last summer and a Spaniard was telling me that prices in Spain sky-rocketed when the Euro replaced the Peseta. She called the Euro an "engaño".......a hoodwinking.........perpetrated upon Spain by European Union politicians.
Last week, I met a visiting woman from the Netherlands. I asked her opinion about the Euro, told her about my conversation with the Spaniard and asked what the effect of the Euro was in the Netherlands.
She replied that it had the same effect that I had described for Spain. She say that, before the Euro, the dollar was worth about 2 Dutch Guilders. However, once the Euro took over, everything that was previously priced at 1 Guilder in the Netherlands was then priced at 1 Euro. As a result, the cost of living in the Netherlands doubled.
She says it is now so bad that the Dutch tend to stay home rather than even go a restaurant or to a pub as they are now so expensive.
The high cost of living is also affecting the number of children that young European married couples believe thay can afford.
The over-valued Euro is destroying the European economy and is seriously affecting European society.
It's Bush's fault.
hey, how about the Nicks!
US goods now very cheap, so our companies make out like gangbusters selling to Europe...What goods do we sell to Europe?
It made Europe more America - like.
ping
Thu Dec 23, 2004 10:29 AM ET
NEW YORK, Dec 23 (Reuters) - The euro rose against the dollar to a record high of $1.3502 on Thursday in partly technically driven trade amid thin pre-holiday volume. Midmorning in New York, the euro (EUR=: Quote, Profile, Research) rose to $1.3502, according to Reuters data, as the market tested options barriers around that level, traders said.
The rise followed U.S. housing data which some analysts said could indicate problems ahead for consumer activity. Sales of new homes unexpectedly plunged at the sharpest rate in more than a decade, down 12 percent in November.
One of the main effects is to make US stocks cheap in Euro terms. Thus the Europeans can buy a greater interest in US companies. The timing may be tricky. The Europeans want to buy when the US companies are cheap but will be going up.
Mexico and Argentina have lived off continually devaluing their currencies for more than 80 years.
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