The euro hit its lowest level against the dollar in more than 13 months Monday after data painted a rosy picture of the U.S. economy and traders waited to see if the European Central Bank would cut interest rates later this week. Posted on 07/04/2005 12:40:22 PM PDT by M. Espinola
The euro hit its lowest level against the dollar in more than 13 months Monday after data painted a rosy picture of the U.S. economy and traders waited to see if the European Central Bank would cut interest rates later this week.
The euro fell as low as $1.1888 in Europe - its lowest point since May 20, 2004, when it dropped to $1.1893 - before recovering slightly to $1.1900 in late afternoon trading. That's compared to $1.1947 in New York late Friday.
The British pound slipped to $1.7611 from $1.7694.
The dollar fell against the Japanese yen, to 111.43 yen from 111.70 yen late Friday after a survey showed Japanese business sentiment improving. The dollar briefly touched a 10-month high of 111.89 yen, dealers said, but met heavy selling from Japanese exporters.
Carsten Fritsch, a currency strategist with Commerzbank, said the euro is facing a dollar buoyed by the interest rate increase last week by the U.S. Federal Reserve and rises in U.S. manufacturing and consumer sentiment indexes.
"The other currencies are under pressure from the dollar," Fritsch said.
Fritsch said comments by France's Christian Noyer, a member of the European Central Bank's governing council, that a country could exit the 12-member euro zone, were also forcing the common currency lower.
The ECB, which has held interest rates at 2 percent for two years, meets Thursday amid calls from politicians to lower borrowing costs in order to spur growth in Europe.
Speculation has mounted that the ECB may move to cut interest rates after Sweden's Riksbank unexpectedly cut its own interest rate to 1.5 percent last month. The Bank of England, which also meets this week, has also been holding its key interest rate steady at 4.75 percent, but analysts said it might move to cut that in light of increasingly dour economic data in Britain.
Fritsch said the sterling's drop has been linked to the confusion and uncertainty in the wake of no votes against the EU constitution a month ago by France and the Netherlands, as well as the raft of dull economic figures last week.
The euro surged to an all-time high of $1.3667 at the end of December on worries about the wide U.S. trade and budget deficits. The dollar has since rebounded, as the Federal Reserve has raised interest rates and economists believe more increases will come this year.
Positive economic news and higher interest rates tend to lift the value of a nation's currency.
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Cue Nelson Muntz.
We should make the dollar sound, respected again, not a yo-yo in value as it has been for the last few years. The dollar should be worth a dollar today; it should be worth a dollar tomorrow.
Is Warren Buffet still betting against the dollar?
Yep, riding his losses further. Too bad, another social liberal losing on a bad bet.
Market is open? Don't they have Independence Day over there? :)
It is worth a dollar today, just as it was yesterday.
We're simply discussing its external buying power...ie how much that dollar can buy. Personally, I like a weak currewncy (Not too weak though). Keeps the exporters attractive.
My daughter is in Spain right now. Her dollars should go a little longer way (although we changed her some Euros before she left and it was a little higher than 1.18. Not much though.)
"The dollar should be worth a dollar today; it should be worth a dollar tomorrow."
UH ... Just when was it that a dollar was not worth a dollar ?
If you feel its worth less, I'd gladly give you 95 cents for every one you have :-)
Unless he's totally gonzo he has has been shorting the Euro for a few months - but will not admit it :)
If/when the Bank of England & other leading E.U. banks continue the trend of cutting interest rates, depending on on the length of her stay, the Euro & the Pound will be even lower on her return date.
Well hopefully she'll spend it all then! < g >
I guess Soros is cutting us some slack.
"We should make the dollar sound, respected again, not a yo-yo in value as it has been for the last few years. The dollar should be worth a dollar today; it should be worth a dollar tomorrow."
To a large degree the soundness of the Dollar is based on interest rates, ours and which direction other leading nations are heading, inflationary factors, volatility in the currency markets, plus the overall health of Wall St.
The Dollar is back on track - the trend is up!
Point of historic currency interest: In November of 1976 the Canadian dollar was at par with the American dollar.
It's so nice of him to be thinking about US :) As he too has jumped on the USD bandwagon. Another one who will not admit it.
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