Poor housing data rocks dollar - Friday 21st December 2007
Currencies were volatile today (December 21st) with the dollar slipping down against the euro and the yen – with many likely to buy gold and profit from its safe haven value as the greenback fluctuates.
US economic data releases this week have revealed an ever broader fall-out from the credit crunch, leading to new speculation about a Fed rate cut early in 2008, and a subsequent damage to the value of the dollar.
A raft of weak US data was capped by housing construction that sunk to their lowest level in 16 years, reflecting a worrying lack of available credit and a lack of will to invest in long-term projects.
Talk of a necessary rate cut took its toll on the dollar, as the euro rose this morning was to 1.4360 dollars, up from 1.4322 in earlier in Sydney currency trade.
But with the yen rising against the dollar as well, Japanese experts claimed that a US federal rate cut was not a foregone conclusion, despite markets factoring it in already.
Tsutomu Soma, bond and currency dealer at Tokyo brokerage Okasan Securities, told Bloomberg: "Inflationary pressure means the Fed doesn't have much leeway to lower rates. The same can't be said about European central banks."
US economic data releases this week have revealed an ever broader fall-out from the credit crunch, leading to new speculation about a Fed rate cut early in 2008, and a subsequent damage to the value of the dollar.
A raft of weak US data was capped by housing construction that sunk to their lowest level in 16 years, reflecting a worrying lack of available credit and a lack of will to invest in long-term projects.
Talk of a necessary rate cut took its toll on the dollar, as the euro rose this morning was to 1.4360 dollars, up from 1.4322 in earlier in Sydney currency trade.
But with the yen rising against the dollar as well, Japanese experts claimed that a US federal rate cut was not a foregone conclusion, despite markets factoring it in already.
Tsutomu Soma, bond and currency dealer at Tokyo brokerage Okasan Securities, told Bloomberg: "Inflationary pressure means the Fed doesn't have much leeway to lower rates. The same can't be said about European central banks."
Goldbug, 21 Dec '07
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