Buck Tanks on Rising Crude
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In the currency market, the dollar came off its intraday lows but still sank against the euro. Late Wednesday, the euro was trading at $1.5548 vs. $1.5452 on Tuesday.
The buck rallied a bit from the beating it took in the face of rising oil, but any gains were capped by a dilution of sentiment regarding the possibility of the Fed raising interest rates sometime soon.
Fed Vice-Chair Donald Kohn fanned that particular flame by saying yesterday that, “It may be efficient to allow some adjustment period in which both overall inflation exceeds its desired low level and the unemployment rate is higher than its long-run sustainable level…”
The goal, Kohn said, would be “setting policy in a manner that balances the undesirable effects of a shock to the system on both inflation and employment, [which should] be more efficient than setting policy so as to deliver more extreme outcomes in either inflation or unemployment.”
However, Kohn also echoed Chairman Bernanke’s recent comments on perception as a self-fulfilling prophecy, by adding that, “Any tendency for these longer-term inflation expectations to drift higher or even to fail to reverse over time would have troublesome implications for the outlook for inflation.”
Source: Buck Tanks on Rising Crude
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Tags: , Ben Bernanke, Currency Market, dollar, euro, forex, inflation, Unemployment RateAbout the Author
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.