SOURCE: Daily FX
The US dollar got crushed as many financial institutions questioned the Fed's success in reviving liquidity in the credit markets. The Swiss franc and the Yen picked up the most against the crumbling dollar as both currencies retraced yesterday's losses to hold near record highs as weary investors dumped their holdings of carry trades. Against the European currencies, the euro strengthened against the US dollar to touch another record high of 1.5573, with the British pound appreciating to hold above 2.02. The commodity currencies also picked up modest gains as oil prices surged to a new record high of $110.01.
Downward pressures for the US dollar billowed as market participants became skeptical of the Fed's success in easing the economic turmoil for the US, and raised speculation that the move merely mirrors the Fed's concerns for the financial markets. As a result, market participants rallied around the belief that the $200B infusion by the Fed may only help to improve liquidity in the credit markets, but will not be enough to serve as an absolute solution for the troubled economy. Fresh economic data added to the bleak outlook for the economy as the MBA Mortgage Applications index fell to minus 1.9 percent due to tightening credit conditions, with the Bloomberg Global Confidence dropping to 13.01 as Bloomberg analysts speculate that the US slowdown will hamper global economic growth. The Monthly Budget Statement also pressed on the US outlook with the deficit widened to minus 175.6B from minus 120.0B as the Bush administration increased the tax rebate for households.
Looking ahead, all economic data for the US will be released at 12:30 GMT, with all eyes focused on the Import Price Index as well as the Retail Sales figures. Following the releases, the Initial Jobless Claims and Continuing Claims release will end the eventful day, and expected downward pressures for the US dollar to persist as the data will reflect stalled growth for the economy.
No comments:
Post a Comment