Dollar Hammers Euro, Pound
Jan 21st, 2009 | By Doug Casey | Category: Financial NewsIn the currency market, the dollar rallied against the euro. Late Tuesday, the euro was trading at $1.2856 vs. $1.3287 on Friday.
Sterling took an especial hammering, falling below the $1.40 mark for the first time since 2001 as evidence mounted that the British banking system is in tatters. That led legendary investment biker Jim Rogers to urge investors to get rid of sterling assets.
“It’s finished. I hate to say it, but I would not put any money in the U.K.,” Rogers said.
Also sagging was the Canadian loonie, after the Bank of Canada (cut interest rates by a half-point and hinted it might not be done. In addition to that, “the loonie is expected to remain under selling pressure on softening economic fundamentals and falling crude oil prices,” said Michael Woolfolk, of the Bank of New York.
While many celebrated, the U.S. stock market “fell more on Barack Obama’s Inauguration Day than any other President over the past 50 years. Since currencies are taking their cue from equities, we have seen a sharp slide in almost all of the major currency pairs,” wrote Kathy Lien, director of currency research at GFT.
“The dollar has outperformed the euro and British pound but it declined against the Japanese yen, indicating that the dollar’s rally is a reflection of pessimism and not optimism,” Lien added. “We are seeing a flight to safety into U.S. dollars but bonds are the instruments of choice and not equities.”
Source: Dollar Hammers Euro, Pound
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