Dollar Hits All-time low vs Euro before Rallying; Bernanke gives Ambivalent Testimony to Congress
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In the currency market, the dollar rallied from $1.6036, a new alltime low against the euro, clawing its way just back into positive territory. Late Tuesday, the euro was trading at $1.5899 vs. $1.5904 on Monday. Traders were carefully watching Fed Chair Ben Bernanke’s testimony to Congress on the state of the economy.
Big Ben continued to bounce his rhetoric between an “increase in upside inflation risks” and “significant downside risks to growth,” with most analysts seeing his words, on balance, as backing off a bit from the recent inflation hawkishness Fed spokespeople have been displaying.
That sent the federal funds futures market lower, reflecting only a 26% chance of an interest-rate increase of a quarter of a percentage point as soon as September — down from a 52% likelihood on Monday.
Meanwhile, a lot of economic data rolled in, none of it particularly good. The Commerce Department reported that, despite some $50 billion in stimulus checks, retail sales rose a paltry 0.1% in June, with auto sales experiencing their biggest drop in more than two years, at -3.3%. Expectation had been for a 0.4% bump in retail sales.
Then the Labor Department said that wholesale prices rose 1.8% last month, after seasonal adjustments, with energy prices shooting up by 6% and food prices increasing by 1.5%. Economists had been looking for a considerably more modest rise of 1.4%.
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Tags: Ben Bernanke, Doug Casey, euro, U.S. interest rates, US dollarAbout the Author
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.