Dollar Takes A Licking
Dec 12th, 2008 | By Doug Casey | Category: Financial NewsIn the currency market, the dollar got slammed against the euro for a second straight day. Late Thursday, the euro was trading at $1.3314 vs. $1.3016 on Wednesday.
The day’s tone was set by a litany of horrible data, beginning with the Labor Department’s report that the number of first-time filings for state unemployment benefits jumped by 58,000, to a 26-year high of 573,000, last week.
Separately, Labor said that the prices of goods and services imported into the United States fell a record 6.7% in November.
And the Commerce Department said that the nation’s trade deficit widened 1.1% to $57.2 billion from $56.6 billion in September, vs. economists’ expectations for the deficit to narrow to $54.5 billion.
On the plus side, the Fed reported that the nation’s households paid down debts in the third quarter, for the first time since at least 1952. Households also paid off more mortgage debt than they took on for just the second quarter on record.
Across the pond, “The not-so-dovish comments from European Central Bank member [Axel] Weber are driving the euro/dollar through the roof,” said Kathy Lien, director of currency research at GFT.
“Weber said Thursday that a January rate cut is not a done deal,” Lien said. “He pointed out that the ECB has never taken interest rates below 2% and that the central bank doesn’t have enough info to decide on a January rate cut.”
If the ECB stops here, while the Fed continues slashing rates, that would be decidedly dollar-negative.
Source: Dollar Takes A Licking
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