Dollar Rises On Traders’ Hopes of Escaping Recession
May 30th, 2008 | By Contrarian Profits | Category: Featured, Financial NewsThe US dollar looks set to make a second straight monthly advance against the yen and euro as gains in stocks showed traders are cautiously optimistic the economy may not slide into recession after all.
“The idea that the Fed will continue to cut rates has been completely put to bed and the market is now flirting with the idea of a rate hike. That has given the dollar a boost,” said Alan Ruskin, head of international currency strategy at RBS Greenwich Capital Markets in Connecticut, in Bloomberg. More from that story:
The dollar touched $1.5461 per euro, the strongest level since May 16, before weakening to $1.5549 as of 12:46 p.m. in New York, from $1.5519 yesterday. It has risen 0.5 percent this month. The dollar was little changed at 105.50 yen, after reaching 105.87 yesterday, the highest since Feb. 28. It has gained 1.5 percent this month against the yen. The euro rose to 164.01 yen, from 163.71 yen yesterday.
Brazil’s real was the biggest gainer this month among the 16 most-traded currencies versus the dollar, rising 2.2 percent. South Korea’s won, with a 2.5 percent drop, was the weakest.
“Economic expansion was primarily due to a boost in exports due to the combination of a weak dollar and strong overseas sales,” says Jennifer Yousfi in Money Morning. “Imports also declined, as the trade deficit shrank to its lowest level in five years.
“The slight boost in GDP could be just what the US Federal Reserve needs to hold off on any further interest rate cuts.”
“My friends and I have been debating the ‘recession’ topic for a while now”, says Wayne Mulligan in The Penny Sleuth. “Are we currently in one? Will we run into one this year or next? What will the effects be?
“But when I read that [Warren] Buffett thinks the US is already in a recession and it will be ‘longer’ and ‘deeper’ than any we’ve seen for quite some time, I definitely began to think less about ‘what if we go into a recession’ and more along the lines of ‘What should I do with my money now?’”
Click here to find out which discount retailers Wayne thinks are worth digging into as the recession bites.
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