NEW YORK (Dow Jones)--The dollar got beaten down Thursday by continued worries that the Federal Reserve's announced bond-buying spree could spark troublesome U.S. inflation and weaken the U.S. currency's value.
The euro, which was under $1.30 less than a week ago, rose to a 10-week high of $1.3739 during the New York session Thursday, while the dollar fell against the yen to a nearly one-month trough of Y93.55.
Those moves helped send the dollar index, which measures the U.S. currency against a basket of currencies, down about 4% from where it was Wednesday afternoon when the Fed announced its latest non-conventional easing program, designed to kick-start the economy. The plan calls for pumping up to $1.15 trillion into the system so as to lower borrowing costs. The injections would occur through the purchase of $300 billion in long-term Treasury bonds during the next six months, and other measures.
"It's been a one-way street in the foreign-exchange market since the Fed announced the buying of U.S. Treasurys," said Vassili Serebriakov, currency strategist at Wells Fargo Bank. "The U.S. dollar is under considerable pressure across the board."
Thursday afternoon in New York, the euro was at $1.3678 from $1.3480 late Wednesday, and the dollar was at Y94.41 from Y96.21, according to EBS. The euro was at Y129.14 from Y129.70. The U.K. pound was at $1.4518 from $1.4288. The dollar was at CHF1.1228 from CHF1.1432 Wednesday.
But while the dollar got hammered by its main rivals Thursday, it staged a modest comeback against some less-frequently traded currencies, such as the Mexican peso.
The dollar had fallen to a 10-week low under MXN14 after the Fed announcement Wednesday, but on Thursday it rebounded to MXN14.24. Analysts said investors are concerned that continued problems with the U.S. economy would likely spell even more trouble for emerging markets, and their currencies.
While the near-term course for the dollar appears grim due to the Fed announcement, Wells Fargo's Serebriakov said, the longer-term outlook might not be quite so bad if other central banks mimic the Fed's liquidity moves.
"Other central banks are also likely to move further on the non-conventional easing path, while the dollar could benefit if the Fed's actions bring forward the day of the eventual recovery," he said.
On Friday, currency traders are likely to keep an eye on a few pieces of U.S. economic data, including the latest reading on fourth-quarter economic growth, and a University of Michigan/Reuters consumer-sentiment survey for February.
-By Dan Molinski, Dow Jones Newswires; 201-938-2245; dan.molinski@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=9wJyqpDVRkP1dIKEQFegyw%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
March 19, 2009 15:55 ET (19:55 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.- - 03 55 PM EDT 03-19-09
Thursday, March 19, 2009
Our Greatest President Looks on with a Saddened Eye; Latest Monetary Policies Troubling
NEW YORK (Dow Jones)--The dollar got beaten down Thursday by continued worries that the Federal Reserve's announced bond-buying spree could spark troublesome U.S. inflation and weaken the U.S. currency's value.
The euro, which was under $1.30 less than a week ago, rose to a 10-week high of $1.3739 during the New York session Thursday, while the dollar fell against the yen to a nearly one-month trough of Y93.55.
Those moves helped send the dollar index, which measures the U.S. currency against a basket of currencies, down about 4% from where it was Wednesday afternoon when the Fed announced its latest non-conventional easing program, designed to kick-start the economy. The plan calls for pumping up to $1.15 trillion into the system so as to lower borrowing costs. The injections would occur through the purchase of $300 billion in long-term Treasury bonds during the next six months, and other measures.
"It's been a one-way street in the foreign-exchange market since the Fed announced the buying of U.S. Treasurys," said Vassili Serebriakov, currency strategist at Wells Fargo Bank. "The U.S. dollar is under considerable pressure across the board."
Thursday afternoon in New York, the euro was at $1.3678 from $1.3480 late Wednesday, and the dollar was at Y94.41 from Y96.21, according to EBS. The euro was at Y129.14 from Y129.70. The U.K. pound was at $1.4518 from $1.4288. The dollar was at CHF1.1228 from CHF1.1432 Wednesday.
But while the dollar got hammered by its main rivals Thursday, it staged a modest comeback against some less-frequently traded currencies, such as the Mexican peso.
The dollar had fallen to a 10-week low under MXN14 after the Fed announcement Wednesday, but on Thursday it rebounded to MXN14.24. Analysts said investors are concerned that continued problems with the U.S. economy would likely spell even more trouble for emerging markets, and their currencies.
While the near-term course for the dollar appears grim due to the Fed announcement, Wells Fargo's Serebriakov said, the longer-term outlook might not be quite so bad if other central banks mimic the Fed's liquidity moves.
"Other central banks are also likely to move further on the non-conventional easing path, while the dollar could benefit if the Fed's actions bring forward the day of the eventual recovery," he said.
On Friday, currency traders are likely to keep an eye on a few pieces of U.S. economic data, including the latest reading on fourth-quarter economic growth, and a University of Michigan/Reuters consumer-sentiment survey for February.
-By Dan Molinski, Dow Jones Newswires; 201-938-2245; dan.molinski@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=9wJyqpDVRkP1dIKEQFegyw%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
March 19, 2009 15:55 ET (19:55 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.- - 03 55 PM EDT 03-19-09
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2 comments:
Def the worst econ team ever assembled. They're making the dollar as worthless as their degrees. Good post. I am not long this market.
Adam
Obama will be out soon, the college/MTV crowd who voted for him will not show up next time. Their parents will be eating dirt soon.
Max
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