Dollar Continues To Fall
Mar 20th, 2009 | By Doug Casey | Category: Financial NewsIn the currency market, the dollar continued to fall against the euro and most other world currencies. Late Thursday, the euro was trading at $1.3671 vs. $1.3485 on Wednesday.
The dollar was sharply lower against other major currencies Thursday in the wake of the U.S. Federal Reserve’s decision to aggressively pump liquidity into the financial system, but it was above session lows in late trading according to a MarketWatch report.
“The aggressive U.S. dollar sell-off came to an end following a last hurrah in early North American trading. Euro/dollar had rallied almost 5% in less than 24 hours following the Fed’s decision to embark on aggressive quantitative easing,” said Matthew Strauss, senior currency strategist at RBC Capital Markets.
The dollar had plunged Wednesday, after the Fed’s announcement that it would buy $300 billion worth of U.S. government debt in coming months.
“For the dollar, the sentiment shift came hard and fast, and it came at a time when the buck already looked due for a rest, technically speaking,” said John Ross Crooks of Black Swan Capital, an independent currency advisory and trading firm.
Stephen Gallo, head of market analysis at Schneider Foreign Exchange, said the move doesn’t necessarily spell the end of the dollar’s ability to rise on economic and financial turmoil. But he added that it does mark the start of a more level “playing field,” now that the Fed has joined the Bank of England, the Bank of Japan and other central banks in monetizing debt.
“We feel that the period of aggressive dollar strength is quickly coming to an end, but it doesn’t mean that the positive correlation between the dollar and risk aversion is no longer in play — although it will be interesting to see in future sessions just how much the dollar strengthens when equity markets slide,” Gallo said in a research note.
On the economic front, more bad news.
The number of people collecting state unemployment benefits jumped by 185,000 to a record seasonally adjusted 5.47 million in the week ending March 7, while new claims dipped by 12,000 to 646,000 in the week ending March 14, the Labor Department reported Thursday. The 185,000 weekly increase in continuing claims was the second largest in the past year.
Source: Dollar Continues To Fall
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