Euro Battered by Weak German Business Reading
Apr 25th, 2008 | By Doug Casey | Category: US Dollar & Forex TradingIn the currency market, the dollar was sharply higher against the euro for the second straight day. Late Thursday, the euro was trading at $1.5682 vs. $1.5881 on Wednesday.
The euro was hammered by a much weaker-than-expected German business sentiment reading. The closely-watched Ifo Institute’s index posted an April reading of 102.4, down from 104.8 in March, far below expectations for a dip to 104.3. The index is at its lowest point since January 2006.
European monetary officials subtly backtracked on interest rates Thursday, with ECB President Jean-Claude Trichet, ECB executive board member Juergen Stark and ECB governing council member Michael Bonello all suggesting a rate hike is not in the cards.
The buck quickly responded to this “looming potential of a narrowing in gap between the monetary policy stance of the Fed and the ECB,” wrote David Watt, of RBC Capital Markets.
On this side of the pond, more dismal housing numbers rolled in. Despite price-slashing by builders, new-home sales still plunged by 8.5% to a 17-year low in March, the Commerce Department said. New-home sales are down 36.6% compared with a year ago and are off 62% from the peak in July 2005.
And even those numbers may be optimistic, because they don’t account for canceled sales, which have ballooned. The report is based on contracts signed, not sales closed.
Finally, Commerce also said that orders for durable goods slipped 0.3% in March, marking the third monthly decline in a row, in line with expectations.
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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.