Skip to comments.Dollar pummeled after Singapore widens FX band
Posted on 10/14/2010 7:37:52 AM PDT by FromLori
LONDON (Reuters) The U.S. dollar index hit the year's low on Thursday while the Australian dollar flirted with parity after Singapore widened its currency's trading band, piling more pressure on to the struggling greenback.
The Australian dollar, which boasts the highest yield among major currencies, soared to a 28-year peak at $0.9994 as investors continued to dump the U.S. dollar on expectations the Federal Reserve will again start printing money next month.
With interest rates at record lows in developed markets, yield-hungry investors are piling cash into emerging markets. The tide of money is rising ahead of an anticipated second round of quantitative easing by the Fed. "Effectively the Singapore move is a tightening of policy and it clearly shows Asian economies are at the opposite end of the spectrum compared to the spare capacity in the U.S. economy," said Chris Turner, head of FX strategy at ING.
The dollar index (.DXY), which tumbled 1 percent to its weakest since December at 76.259, is on course for a test of trendline support at 75.95, with its November low of 74.17 then not far away. The 75.95 target is the trendline from two major lows in July 2008 and in November 2009.
(Excerpt) Read more at news.yahoo.com ...
And check this out snippet
GCC states ‘must unite for single currency plan’
MANAMA: In order to achieve critical mass, a GCC monetary union would need to involve all six member states.
“But the four countries still committed to the single currency should not be put off with the idea that two others want to remain outside the union,” according to Dr Adam Posen, an external member of the Monetary Policy Committee of the Bank of England and a senior fellow at the Peterson Institute for International Economics.
“Once a single currency has been set up, then it is very unlikely that the UAE would not realise the benefits of joining,” he told guests at a seminar organised by the International Institute for Strategic Studies (IISS) -Middle East in a lecture entitled ‘Lessons from Europe for Gulf Monetary Union’.
“From the UAE point of view, it would be better for them to be in from the start as that would allow them to be able to play a role in developing the institutions that go with a single currency.”