Dollar Marches Higher
Posted on: Feb 5th, 2009 | Doug Casey | Filed under Financial News
In the currency market, the dollar rose against the euro. Late Wednesday, the euro was trading at $1.2846 vs. $1.3044 on Tuesday.
The dollar got a lift against the euro after credit-ratings agency Fitch Ratings downgraded Russia’s long-term foreign and local currency ratings, or IDRs, to BBB from BBB+.
The downgrade puts pressure on the euro because Russia will likely be forced to sell euros to rebalance its currency basket.
“The Russian debt-downgrading once again highlights the strains within the European financial system with weaker commodity prices playing no small part,” said Andrew Wilkinson, of Interactive Brokers Group in Greenwich, Conn.
“Russia as an important trading partner means that this downgrade cannot do one jot of good for the larger eurozone in the grand scheme of things,” Wilkinson added.
“There is no respite for the ruble at the moment,”” wrote strategists at Brown Brothers Harriman. “In turn, none of this is particularly supportive for the euro which fell to a session low on the back of the Russian news.”
Today’s European Central Bank meeting will be closely monitored. While everyone expects the ECB to leave its key interest rate unchanged at 2% when the rate-setting Governing Council meets in Frankfurt, the accompanying rhetoric will be scrutinized for clues as to the bank’s future direction.
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