Dollar Slightly Lower Against Euro
Jun 18th, 2009 | By Doug Casey | Category: US Dollar & Forex TradingIn the currency market, the dollar slipped again against the euro. Late Wednesday, the euro was trading at $1.3895 vs. $1.3846 on Tuesday.
The buck hit the skids after the Labor Department reported U.S. consumer prices increased a seasonally-adjusted 0.1% last month. That was well below economists’ expectations for a 0.3% rise. The CPI has now fallen 1.3% in the past year, the biggest decline in prices since April 1950.
Core CPI — excluding food and energy — also rose a seasonally adjusted 0.1% in May, right in line with expectations.
“While headline inflation will likely be temporarily boosted in the near-term by substantial upside in gasoline prices, we expect core inflation to continue to decelerate steadily going forward as slack in the economy reaches unprecedented levels,” wrote economists for Morgan Stanley (NYSE:MS).
The day’s paradox was that, “The lesser the inflation threat gets, the more support the dollar should have gotten,” said Brian Dolan, chief currency strategist at Forex.
Investors have been closely watching for any inflationary trend, which might prompt the Federal Reserve to raise its target overnight rate from record lows in the future. The Fed meets next week.
This week’s CPI and PPI numbers seem to indicate that “the Fed will point strong forward-guidance language in next week’s FOMC statement to suggest that the Fed is unlikely to fulfill market expectations of four rate hikes over the next 12 months,” said analysts at RDQ Economics.
Source: Dollar Slightly Lower Against Euro
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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.