Dollar Craters Against Euro
Dec 16th, 2008 | By Doug Casey | Category: Financial NewsIn the currency market, the dollar plummeted against the euro, the fourth straight day of losses. Late Monday, the euro was trading at $1.3679 vs. $1.3374 on Friday.
“After largely being confined to range trading against the major European currencies in recent weeks, the dollar has broken down,” said Marc Chandler, of Brown Brothers Harriman.
The British pound also gained 2.1% vs. the greenback, while the Swiss franc was up 1.7%.
However, “We suspect that U.S. fundamentals have not deteriorated as much as the price action is prompting the dollar bears to suggest,” Chandler said.
“Instead, we would regard the greenback’s decline as largely technical in nature, relating to profit-taking by momentum traders on the second-half dollar rally ahead of the end of the year,” he concluded.
Analysts awaited today’s interest rate decision from the Fed, with most expecting a cut of the benchmark by half a point to 0.5%, although some are going so far as to forecast a cut of three-quarters of a percentage point, to 0.25%.
“The U.S. dollar is selling off aggressively going into the rate decision as traders realize that after [today], the dollar will either be the lowest or second lowest yielding G10 currency,” said Kathy Lien, director of currency research at GFT. “No matter how you look at it, an interest rate of 0.50% is just as bad as an interest rate of 0.25%.”
Source: Dollar Craters Against Euro
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