PrintOctober 22, 2007
Dollar Tumbles to all time low in Europe
Fears of continued bad housing numbers coming from the Commerce Department has the dollar sliding to an all time low against the Euro:
The euro rose as high as $1.4348 in Asian trading, breaking a previous record of $1.4319, set on Friday, before settling back to $1.4280 in late morning trading in Europe.This latest slide anticipates a rate cut by the Fed that would further erode earnings for those who still hold dollars.
That was barely changed from the $1.4281 it bought in New York late Friday. Concerns about the health of the U.S. economy have put pressure on the dollar for months, but whether the Federal Reserve will cut interest rates again soon is considered by traders a tossup.
"Clearly any further speculation that we'll see another rate cut from the Fed as soon as next week would add" more pressure, said James Hughes, a market analyst CMC Markets in London.
The only good news is that there has been no massive sell off of greenbacks by major holders like Saudi Arabia and China. Other US bonds and securities are also being held on to by investors although a further drop in rates in this country could force the European banks to raise their own rates which might initiate the kind of sell off that would be very damaging to our economy.
It is unclear how much longer the slide will continue - perhaps until investors are convinced that high fuel prices, a bad housing sector, and falling interest rates won't tip the US economy into a recession.
