Hello everybody.
The USD extended its loss against its major rivals today on speculations that the Fed may continue to lower fed fund rates in the rest of the year. The EUR touched just below 1.4100 against the USD, while the JPY strengthened to as low as 114.00 against the USD.
The USD index fell to an all-time low at 75.73 yesterday. Interest-rate futures pricing indicated traders see an 80% chance that the Fed may cut a quarter-percentage point to 4.50% on its policy meeting at the end of October.
In the early session, US unemployment claims fell 9k to 311k, beating the estimate of 321k. Philadelphia Fed business conditions index dropped from 0.4% to minus 0.6% in August, below the estimate of minus 0.2%.
Fed Chairman Ben Bernanke today said in a congressional hearing that subprime mortgage delinquencies are likely to rise further, and the Fed is committed to prevent lending problems. He added the market tends to self-correct over time and subprime mortgage market has adjusting sharply. US Treasury Secretary Henry Paulson said the Fed’s move help stabilize market credit crunch.
The USD extended its loss after London’s Daily Telegraph newspaper cited that Saudi Arabia did not lower its interest rates in line with the Fed, though King Abdullah’s advisor said the country will not unpeg its currency from the USD in the near future.
Peace and trade safely everyone...
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