Dollar Little Changed
Apr 22nd, 2009 | By Doug Casey | Category: Financial NewsIn the currency market, the dollar slipped slightly against the euro. Late Tuesday, the euro was trading at $1.2957 vs. $1.2924 on Monday.
The euro benefited after the Mannheim-based Center for European Economic Research, or ZEW, said its closely-watched monthly sentiment gauge rose to 13 in April from a reading of -3.5. That marked its first positive reading since July 2007.
“Along with other indicators, the ZEW sentiment indicator reveals that there are well-founded expectations that the downward dynamics of the business cycle are bottoming out,” said ZEW President Wolfgang Franz. “It is even becoming more likely that the economy will slowly recover in the second half of this year.”
However, the survey has little correlation with gross domestic product, said Jennifer McKeown, European economist at Capital Economics. For that, market participants will turn to the Ifo Institute’s German climate index and the euro-zone purchasing managers survey, to be released later this week.
“On balance, while the pick-up in some of the forward-looking indices is a broadly encouraging sign for the future, we still expect German GDP to fall by a whopping 6% this year,” McKeown wrote.
And the IMF was saying the global financial crisis is far from over. In a new report, the fund said financial institutions now face total losses of $4.1 trillion on loans and other assets, including $2.7 trillion in write-downs in the U.S., up from the $2.1 trillion it estimated in January and almost double what it forecast last October.
U.S. banks so far have only taken about half the write-downs they face, the IMF said. If banks took all the write-downs immediately, the IMF calculates it would wipe out their common equity altogether.
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