Dollar Slammed Against Euro
Nov 25th, 2008 | By Doug Casey | Category: Financial NewsIn the currency market, the dollar took a savage beating vs. the euro. Late Monday, the euro was trading at $1.2905 vs. $1.2587 on Friday.
The government’s bailout of Citigroup (NYSE:C), with a plan that includes a $20 billion capital infusion, and guarantees for as much as $306 billion of Citi’s troubled assets, clearly didn’t sit well with buck boosters.
David Watt, senior currency strategist at RBC Capital Markets, was unconvinced, writing that, “[Yesterday’s] sell-off in [the] U.S. dollar and the equity bounce are welcome reprieves, but do nothing to undermine an overall bullish U.S. dollar stance.”
The euro’s charge against the greenback came, a bit surprisingly, after the closely-watched, Munich-based Ifo Institute’s November business-climate index showed a steeper-than-expected drop to a 15-year low of 85.8.
Economists took that as a clear signal that Europe’s largest economy is deteriorating. Also likely is that the euro zone’s hitherto resilient labor market will begin to suffer significantly in coming months.
“The upshot is that the recession is becoming increasingly entrenched, with more pain to consumers lying ahead,” said Tulia Bucco, an economist with UniCredit MIB in Milan.
Source: Dollar Slammed Against Euro
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