Print Page - US dollar continues to slump against Euro

Prophetic news is coming fast and furrious these days....I can hardly keep up with it all.

********************************************
(http://us.news2.yimg.com/us.yimg.com/p/afp/20041110/capt.sge.exh39.101104225403.photo00.photo.default-389x261.jpg)

U.S. Dollar Slumps to New Low Vs. Euro

Wed Nov 10, 4:47 PM ET Business - AP

By DAVID RISING, Associated Press Writer

BERLIN - The U.S. dollar slumped to a new all-time low Wednesday against the euro, which briefly rose above $1.30 for the first time after data showed the U.S. trade deficit above $50 billion in September for the fourth straight month.

The euro briefly rose to $1.3007 after the trade figures were released, breaking its two-day-old record of $1.2987 before dropping back. In late New York trading, the euro was quoted at $1.2895, down slightly from $1.2903 late Tuesday.

The dollar's recent drop against the 12-nation European currency's recent rally has been fueled by persistent worries over high oil prices and the U.S. trade and budget deficits.

Wednesday's spike came despite a drop in the trade deficit to $51.6 billion in September, which beat most forecasts with exports posting their best month on record.

"The market is as the market does," said David Bloom, a currency strategist at HSBC Bank PLC in London. "Everyone tried to test the options barriers to see if it would keep going and it didn't — you can have moments of madness in any market but it's come back to its senses."

The euro, launched in 1999, languished under $1.00 for about 2 1/2 years between 2000 and mid-2002. It is now 57 percent above its all-time low against the dollar of 82 cents, reached in October 2000.

The latest rally has taken the euro from about $1.20 two months ago to today's level, prompting European Central Bank President Jean-Claude Trichet to call the surge "brutal" earlier this week.

The general feeling now is that the currency will remain around the current level, before beginning a more gradual rise next year, said Carsten Fritsch, an economist at Commerzbank in Frankfurt.

"I think for a lasting break of this $1.30 we will need some fresh disappointing news from the United States," he said. "Our focus is $1.35 by mid-next year and $1.32 by the end of the first quarter."

Bloom forecast a euro level of $1.35 within the next six months.

For the 12 countries that use the euro, the stronger currency raises fears that it will snuff out their moderate, export-driven economic recovery by making exports more expensive. But it takes much of the sting out of high oil prices on the continent, since oil is priced in dollars and the strong euro makes it relatively cheaper.

For Americans, consequences include higher prices on imported goods and more expensive European vacations. But a weak dollar can be a boon to U.S. manufacturing exporters, making their goods cheaper compared to those of European competitors, and fattening overseas sales and profit margins.

Although the Bush administration says it has a strong dollar policy, most analysts think the White House doesn't mind a lower dollar because that can help U.S. economic growth and jobs.

Experts say that as the slide of the dollar continues, international money managers and foreign central banks will be less likely to buy U.S. stocks and bonds.

"The U.S. has got these massive deficits that nobody wants to buy into," Bloom said. "It needs everybody to be buying dollars all day, every day, and the world doesn't want to do that."

The dollar was mixed against other major currencies Wednesday. In late New York trading, the greenback bought 107.17 yen, up from 105.70 late Tuesday; 1.1807 Swiss francs, down from 1.1831; and 1.1948 Canadian dollars, down from 1.1979. Meanwhile, the British pound was weaker at $1.8457, down from $1.8574.
********************************************

Expect more of this trend. A rising world power will eventually need a world economy. If only someone could solve all these problems. ;)

Maranatha!

ChristiansUnite Forums

Theology => Prophecy - Current Events => Topic started by: 2nd Timothy on November 17, 2004, 04:40:48 PM