Buck Gains vs. Euro on EU Weakness
May 8th, 2008 | By Doug Casey | Category: US Dollar & Forex TradingIn the currency market, the dollar was sharply higher against the euro. Late Wednesday, the euro was trading at $1.5404 vs. $1.5525 on Tuesday.
The buck fought off the latest bad economic news. The National Association of Realtors reported that its index of sales contracts on previously owned homes, considered a leading indicator of existing home sales, declined by 1.0% in March. It is now more than 20% below the March 2007 level.
But that was overridden by signs of weakness in the European Union. The European Commission trimmed its forecast for eurozone growth, saying it now expects a 1.7% rate in 2008 and an even weaker 1.5% rate in 2009. 2007 growth clocked in at 2.6%, and as recently as February EU growth for 2008 was projected to be 1.8%.
The European Central Bank and Bank of England both meet today, and they’re widely expected to keep interest rates at 4% and 5%, respectively.
Meanwhile, Federal Reserve Bank of Kansas City President Thomas Hoenig publicly spoke the I word yesterday, saying that inflationary pressures “now stand at unacceptably high levels.”
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.