Dollar Spikes Against Euro, Eurozone Nations Can’t Agree on a Bailout Plan
Oct 7th, 2008 | By Doug Casey | Category: Financial News, US Dollar & Forex TradingIn the currency market, the dollar pummeled the euro. Late Monday, the euro was trading at $1.3492 vs. $1.3774 on Friday. It was a wild day on the Street, as huge selloffs in the overseas equities markets spilled over into the U.S. The Dow plunged by 800 points at its low, the biggest intraday drop on record, before trimming its losses. And it closed below the 10,000 mark for the first time since October 26, 2004.
All that worked, a bit perversely, in the buck’s favor. “Consistent with the pain inflicted in equity markets, risk aversion was the dominant theme” in currencies, said David Watt, of RBC Capital Markets.
But what of the big bailout that passed on Friday?
“The U.S. $700 billion bailout plan will not do the trick — at least that’s how the currency market feels,” wrote Kathy Lien, director of currency research at GFT Forex.
“Deleveraging or the liquidation of risk is happening on a global scale as investors question if guaranteeing funds and bailing out banks are the right prescriptions for the credit crisis,” Lien added.
Euro holders sold after a weekend crisis summit in Paris, featuring the leaders from Germany, France, Great Britain and Italy, was unable to come up with a unified plan for dealing with banking-sector turmoil.
“European governments are dazed and confused and this isn’t helping confidence and will probably end up costing them more in the long run,” said Jim Reid, of Deutsche Bank.
Source: Dollar spikes against euro - Eurozone nations can’t agree on a bailout plan over there
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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.