Dollar Little Changed Against Euro
Nov 19th, 2008 | By Doug Casey | Category: Financial NewsIn the currency market, the dollar edged higher against the euro. Late Tuesday, the euro was trading at $1.2618 vs. $1.2643 on Monday.
The day’s big number was the Labor Department report showing that producer prices fell 2.8% in October, the most in at least 50 years.
The headline number was slightly misleading, however, as the plunge was triggered by a 24.9% drop in gasoline prices, a record freefall going back to 1947, when the government first began keeping track. Outside of food and energy, prices were actually up, by 0.4% in October.
But Nigel Gault, economist with IHS Global Insight, downplayed the core figure, saying that, “We saw huge commodity price increases really through the middle part of this year … It took a long time for that to start feeding though into the core inflation. So we’re probably seeing the last gasp of the inflationary implications of the previous price hikes.”
While Gault admitted he’d prefer a lower core rate, he added that, “One reason I’m not so concerned is that over the past two months there’s been an upward contributions to core from the vehicles component, and the vehicles component is very volatile from month to month … How likely is it that manufacturers would be able to pursue a price increase for light trucks? So I view it as a temporary increase.”
And Ian Shepherdson, economist with High Frequency Economics, predicted “further sharp declines” for inflation in November, however, “Needless to say this is all about energy prices.”
Source: Dollar Little Changed Against Euro
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