Dollar Rallies Early, but Peters Out
May 9th, 2008 | By Doug Casey | Category: US Dollar & Forex TradingIn the currency market, the dollar gave back most of its early gains but remained slightly higher against the euro. Late Thursday, the euro was trading at $1.5396 vs. $1.5404 on Wednesday.
The buck came off its strong early highs after both the European Central Bank and the Bank of England stood pat on interest rates, in line with expectations. The ECB Governing Council decision was unanimous.
Jean-Claude Trichet, the ECB’s president, adopted a rather hawkish tone in his accompanying rhetoric, which is always scoured for its inner meaning, as he stressed that inflation risks remain.
“As we have said on previous occasions, inflation rates are expected to remain high for a rather protracted period of time, before gradually declining again,” Trichet said.
Unlike the Fed, the ECB has an explicit mandate to fight inflation, and it’s looking at unacceptable numbers. EU CPI in March was 3.3%, far above the ECB’s target of “close to” 2%.
The British pound got little support from the Bank of England’s stance, as it is widely considered temporary. “Given the lackluster economic data from U.K., most currency traders are anticipating more easing from the BOE as the year progresses,” said Boris Schlossberg, of Forex Capital Markets LLCR
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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.