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Feb End US Dollar Continues Decline

 
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Feb End US Dollar Continues Decline Can't Post
The US dollar continues to depreciate against most major currencies after weak manufacturing data and consumer sentiment drove home by FED comments about the US economy and the possibility of further interest rate cuts.

Lower interest rates can jump-start a country's economy, but may weigh on its currency as traders transfer funds to countries where they can earn higher returns.

The 15-nation euro rose to $1.4678 Friday from $1.4633, but the dollar jumped higher against the pound. The British currency fell to $1.9603 from $1.9691.

The dollar also slipped to 107.69 Japanese yen from 107.93 yen and dropped to 1.0925 Swiss francs from 1.0973 francs.

A New York Federal Reserve survey showed that manufacturing conditions in the region had deteriorated, while the central bank said that the country's industrial output rose by only 0.1 percent in January. The increase in industrial production was due mostly to higher output at utility companies because of the weather.

A preliminary Reuters/University of Michigan survey showed consumer confidence sank in February to a 16-year low.

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Barry
Mr. Do It All


Feb 19, 2008, 11:50 AM

Post #1 of 2 (456 views)

Re: [Barry] Feb End US Dollar Continues Decline [In reply to] Can't Post
That combined with the fact the FED is talking about lowering interest rates again. That's bad, why? cause investors in US funds and bills will move away from these instruments as the short term interest rate plans to decrease.

Driving much of the dollar's decline this week were tepid remarks about the U.S. economy by Bernanke, who hinted that the central bank would cut interest rates once again at the Fed's March meeting.

The US dollar at the end of Feb. hit successive all-time lows against the euro, breaking the key psychological barrier of $1.50 for the first time since the 15-nation currency was launched in 1999.

Currency experts, however, argue that the dollar will remain under pressure at least through the next month or longer.

More economic indicators like joblessness will impact the dollar that's rumored to be near a ceiling of $1.55 against the euro in the near term and fall further against the yen, sinking as low as ¥101 or ¥102.

Even the most bearish currency experts agree that the pressure on the dollar should abate some time around the middle of 2008, after the Fed winds down its rate-cutting campaign and as the sluggish U.S. economy starts to perk up.

econmod
Broker / Moderator

Mar 2, 2008, 9:44 PM

Post #2 of 2 (275 views)

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