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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