Dollar Gains On Euro
Jan 13th, 2009 | By Doug Casey | Category: Financial NewsIn the currency market, the dollar pushed higher against the euro. Late Monday, the euro was trading at $1.3373 vs. $1.3452 on Friday.
It wasn’t so much that the buck soared as that the euro got slammed by news that Standard & Poor’s might cut its ratings on Spain, and by growing expectations that the European Central Bank will cut interest rates later this week.
“At the end of last week, the rating agency S&P put Greece’s long-term sovereign rating on credit watch for a possible downgrade. [Yesterday] it did the same for Spain,” said Marc Chandler, of Brown Brothers Harriman.
“The market appeared to take advantage of the headline announcement to do what they wanted to do and that was take the euro down,” Chandler added.
In addition to the S&P downgrades, there’s been a recent run of abysmal euro-zone data, leading to the ECB expectations. The central bank’s key lending rate now stands at 2.5% with most economists expecting it to be slashed by half a percentage point, or 50 basis points, on Thursday.
Even if the bank does meet expectations, “we would need to see significant flexibility on the part of the ECB to help stabilize the economy and sentiment on the euro,” wrote strategists at BNP Paribas.
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