Posted on 09/20/2007 2:23:49 AM PDT by Hydroshock
The dollar sank to fresh record lows beyond $1.40 per euro on Thursday, weighed down by a hefty U.S. interest rate cut earlier this week and expectations of more moves to come.
The breach of the psychologically key $1.40 level versus the euro Euro SpotEUR-TN 1.4034 0.0074 +0.53%
Quote | Chart | News | Profile | Add to Watchlist [EUR-TN 1.4034 0.0074 (+0.53%) ]-- heralded as a pain barrier for euro zone exporters -- came in early European trade, with the move taking out key stop-loss and option trading barriers and fuelling a broad-based euro rally.
The single European currency Euro Spot%24%24EURUSD 1.4034 0.0074 +0.53%
The U.S. Federal Reserve slashed interest rates by 50 basis points last Tuesday to 4.75% in a bid to shield the U.S. economy from a deepening housing slump and credit market turbulence. Fed Chairman Ben Bernanke speaks at 1400 GMT.
RELATED LINKS Mortgage Applications Up as Refinancing Picks UpComplete Currency DataOil Sets Record Above $82, U.S. Fuel Supplies FallVideo Survey: After the Surprise Rate Cut, Are CEOs Happy Now?BOE to Inject $20 Billion to Ease Three-Month RatesBoE Unanimous on Steady Rates at September Meeting Investors expect more Fed cuts in the months to come while rhetoric from the European Central Bank suggests it could resume raising rates once calm return to financial markets.
"As long as the market is focused on rate cut expectations from the Fed, the dollar will stay on the defensive," said Carole Laulhere, currency strategist at Societe Generale in Paris.
"We are not massively negative (on the dollar) versus the euro because we are already at very high levels, but we think we will stay over $1.40 in the weeks ahead."
(Excerpt) Read more at cnbc.com ...
Sadly, the anti-capitalists have done their job well. They have successfully driven off much industry that we could have kept, and created a ceiling so high for potential start ups that the capital expenditure necessary to "start up" is astronomical for the average American to consider.
A punitive tax system geared towards castigating the successful makes it even more necessary for businesses to "protect" their assets and hide their profits. Otherwise they become confiscated by the latest tax-scam the socialists can invent.
It is a testament to the greatness of our country that it can still happen and does happen.
Some of us just can’t wait until the new NA currency, the Amero is announced, anticipating that we will then to maintain parity with the Euro. (some sarc.)
insert “be able” between then and to, putz.
I’m sure Drudge will have yet another ALL CAPS RED FONT headline for this today. I assume we’ll see another 60 or so such headlines over the next year or two given how enamored he seems to be with the story.
Perhaps what’s going on is a new level of contextual and financial gamemanship. Wall Street cheered the rate cut, and so did the press. Why?
Did it lower mortgage re-sets? No—those are set to the LIBOR (London market rate) which the Fed doesn’t control.
Did it bolster the key underpinning of our national wealth, our currency? No—it weakened it.
Did it encourage foreign investors to invest their money in the U.S.? No—it drove them away, with potentially catastrophic results.
New contributor Jim S. sent in this important story Fears of dollar collapse as Saudis take fright.
“Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.”
And Saudi Arabia isn’t the only holder of massive U.S. dollar assets who may bolt:
China threatens ‘nuclear option’ of dollar sales:
Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.
Shifts in Chinese policy are often announced through key think tanks and academies.
Described as China’s “nuclear option” in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.
It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.
THE ABOVE COMMENTS CAME FROM AN INTERESTING DAILY BLOG: http://www.oftwominds.com/blogsept07/rot-within4.html
Many countries are going to bail out of buying T bills, and US dollar Fores reserves may/are being shed by China, Japan and now the whole ME and others. The long Tbills in July dropped by about 80%. The estimate of a Dollar Index of 60 in a couple of years, could, with even worse conditions, reach even 40.
Bush will do anything in his attemt to save face.
Newt’s majority in Congress, is expendible
everything else, expendible
only thing not expendible is high oil prices
That means it will be less profitable for the Europeans to sell their goods in America.
“New contributor Jim S. sent in this important story Fears of dollar collapse as Saudis take fright.”
Yes, from our good friend Ambrose. Funny track record Ambrose has in “almost but not quite predicting almost but not quite doom for America” in a variety of ways.
I tend to agree. The europeans are not going to pass up the opportunity to inflate.
Spot on!
This is nonsense. China's threats are hollow. They are not going to do anything that would alienate their largest trading partner, which just happens to be where they get most of their hard cash. They may be Commies at heart, but they love cash just like anybody else. They want our dollars. The more the better. You might want to rethink that one......
David, don’t be so hard on yourself.
Huh?
I submit it is the capitalist who have done their job well.
Congress, bowing to corporate and foreign lobby, enacted trade policy that made it easier for jobs to be farmed out overseas.
Question: Congress, filled with supposedly the brightest of the bright to lead our country. Why do you suppose they’ve neglected to alter the tax code in favor of a pro-American manufacturing environment?
Americans have always enjoyed a higher standard of living because we work hard, long hours (more than any other nation), and produce a quality product.
But at a price to the corporations. Now, ship those same well paying positions overseas. Pay Chinese workers pennies per hour, with few benefits and little environmental regulation.
Cheap, inferior, and sometimes dangerous products hitting our markets.
American / Chinese industry poisoning the heck outta the land, air and waterways.....all for the corporate bottom line.
Sometimes regulation is a good thing.....Corporate America routinely escapes regulation that benefits the health and well being of the worker by taking business where there is very little safeguards.....again, for the bottom line.
Just ask the Mexicans along the Rio Grande. Birth defects, cancers and other ailments soared during the years of heavy production along the border.
Now those same jobs are being shipped to China....cost too much to clean up the mess don’tcha know.
Sometimes ya get what ya pay for....if your lucky.
Welcome to globalism.
I have wondered what the “cheaper dollar is good for more exports” crowd will think when the exchange rate gets down to 2 bucks to the euro and it will require 10 bucks to buy a Big Mac?
Unless you're buying your Big Mac in Europe or your Big Mac is built with European ingredients, why would a stronger Euro make a Big Mac $10?
Go back and take “ECON 101” again.
You first.
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