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The dollar rose sharply Tuesday after the Federal Reserve announced new measures to inject liquidity into the financial system, easing concern about a deepening credit crisis and a U.S. recession.
The 28,000 delegates can now start to discuss the real issue of the day. Who will throw the most fabulous party? And more importantly: how the devil are they making enough money to pay for it?
The dollar tumbled against the yen Monday as fears of a U.S. recession hit stock prices but steadied versus the euro after Europe's top monetary official said he was worried about recent exchange rate moves.
We all expected the credit crunch to cast a shadow across the start of this year's MIPIM real-estate conference starting in Cannes tomorrow. But a literal storm was the immediate problem.
For the week ending Friday, March 07, 2008 the US Markets all ended the week down close to 3% or greater. The Dow closed below 12,000, the NASDAQ breached its 52-week low, and the S&P 500 closed below 1300 for the first time since September 11, 2006. In contrast commodities continue to hit new record highs, and the US dollar fell to record lows on a weak economy. Bernanke hinted at further rate cuts, the ECB held rates steady, and jobs unexpectedly fell, heightening fears that the US economy has hit a recession. Many economists are no longer questioning a recession, but how long it will last.Next week, the markets will watch for Retail Sales on Thursday and earnings from some of the smaller retailers, while inflation watchers await the CPI report on Friday, seen rising again in February. If consumer prices rise beyond comfort levels, the spectre of stagflation, price inflation amidst weak economic growth, will again rear its head.
The dollar rebounded from record lows triggered by a surprise contraction in U.S. payrolls for a second straight month as attention shifted to moves by the Federal Reserve to ease tight liquidity conditions.
The European Central Bank holds rates steady on Thursday and Bernanke suggests further rate cuts in the US, all sending the US dollar lower, and the euro and pound higher. According to Reuters, Bernanke indicated in his testimony before congress that he was more concerned about US economic growth than inflation, which erodes confidence in US assets and the demand for dollars to buy them.
By many measures, confidence in the dollar has never been lower, and some fear more Federal Reserve interest rate cuts will make matters worse by swelling inflation and undermining long-term U.S. economic health.
The battered U.S. dollar may be near the bottom of its weakening cycle, but a recovery rally will take a while to materialize, because big uncertainties still hang over the U.S. economy, analysts told CNBC.com.
The dollar extended losses against the euro and the yen Thursday after U.S. pending home sales were unchanged in January, doing little to allay investor worries over the deteriorating U.S. economic outlook.
The ECB and the BOE left interest rates unchanged on Thursday, as fears of inflation outweighed worries that the U.S. economic woes may spread around the world.
The European Central Bank's surplus fell to 286 million euros ($439 million) last year from 1.37 billion euros in 2006, because of the euro's strength, the bank said on Thursday.
The dollar hit a fresh record low against the euro and a basket of currencies Wednesday, on renewed concerns about the health of the U.S. economy.
The foreign exchange maneuver known as the carry trade looks set to continue unwinding, with bearish investors scared of risks. But buying opportunities might emerge from the trend, analysts told CNBC on Wednesday.
The dollar turned higher against the yen on Tuesday as U.S. stocks trimmed losses late in the afternoon on talk of a bail-out for bond insurer Ambac.
Worried euro zone policymakers pressured on Washington on Tuesday to do more to halt the dollar's decline, a day after the U.S. currency hit a record low against Europe's single currency.
The dollar halted a sharp sell-off against the euro and a basket of major currencies on relief that U.S. manufacturing had not deteriorated as much as expected.
The dollar spiraled lower as worries about the US economy depressed the currency and raised thorny issues in Europe about how to cope with the growing gap.
Plans for sweeping federal programs that would aid troubled mortgage borrowers would bring unfair relief to speculators and reward investors who made bad bets, U.S. Treasury Secretary Henry Paulson said Thursday.
The dollar dropped to record lows against the Swiss franc Thursday as U.S. stocks fell following comments from Federal Reserve Chairman Ben Bernanke suggesting the possibility of more U.S. bank failures.