The US$ seems [so far] to be holding the bottom. It is crucial that it does so, as any further weakness will exacerbate further the inflation currently damaging the US consumer. The consumer will be vital to any growth of the economy going forward.
It would also seem to provide the markets analysis of the recent Federal Reserve sitting on interest rates. The market [currently] would seem to accept the rhetoric that the Fed will start raising at some point, and that no further cuts to the rates are planned.
July 4, 2008 at 10:58 am
Duc,
do you believe the $US is manipulated?
Logically after the ECB rate cut the dollar should have tanked. No?
July 4, 2008 at 12:02 pm
Kat,
I assume you mean an ECB “raise”
Sure the US$ is manipulated indirectly. By this I mean that if the Central Banks can come to an arrangement or understanding as regards their interest rate policy, then the currency markets will do the rest.
They cannot directly intervene and by buying/selling influence prices.
From Bloomberg;
July 3 (Bloomberg) — The euro fell the most against the dollar in more than two months after European Central Bank President Jean-Claude Trichet signaled that he may not increase interest rates again.
The 15-nation euro also dropped against the pound and the yen as Trichet said he has “no bias” or “pre-commitment” following the decision to raise the ECB’s main refinancing rate by a quarter-percentage point to 4.25 percent.
We see that now the ECB is signalling no further rate increases, or possibly even a cut in the future, while Bernanke is signalling that the Fed will increase rates.
Thus we have a weakening Euro & stronger Dollar, or at least a floor currently under the US$ lows.
The strength in the Euro has been very damaging to Euro exports, a particular example wood be EADS and their aircraft sales…the French, always notorious screamers, have been screaming about Euro strength US$/weakness for a while now.
Thus, the early signals are emanating from the currency markets and credit markets.
jog on
duc