Dollar Cratering
May 22nd, 2009 | By Doug Casey | Category: US Dollar & Forex TradingIn the currency market, the dollar continued to fall against the euro. Late Thursday, the euro was trading at $1.3904 vs. $1.3829 on Wednesday.
The dollar index, which tracks the buck against a trade-weighted basket of six major counterparts, fell to its low point for the year as Treasury yields rose and commodity prices hinted at higher inflation.
There was a spate of economic data through which to pick yesterday, beginning with the Philadelphia Fed’s report on manufacturing in that region. While the reading improved to -22.6 in May, from -24.4 in April, that’s still very weak, as numbers below zero indicate contraction in the industry.
Next, the Labor Department reported initial jobless claims, which dropped by 12,000 to 631,000 in the week ending May 16. However, the number of continuing claims for the week ending May 9 (considered a better indicator) was 6.66 million, an increase of 75,000 from the previous week, and the highest reading on record.
“These latest numbers do not encourage the idea that the pace of layoffs is dropping sharply,” said Ian Shepherdson, of High Frequency Economics.
Finally, the Conference Board’s index of leading indicators climbed to 0.1% in April, the first increase in seven months, from -0.3% the prior month. The move to a positive number indicates the recession will be less intense in the near term, according to the Board.
“The question is how long before declines in activity give way to small increases. If the indicators continue on the current track, that point might be reached in the second half of the year,” said Board economist Ken Goldstein.
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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.