Posted on 11/30/2006 2:03:32 PM PST by Brilliant
NEW YORK (AP) -- The dollar fell Thursday to its lowest level against the British pound in 14 years and lost value against the euro and Japanese yen.
The dollar's decline came on mixed economic news from Washington and positive developments in Germany, Europe's largest economy.
The Commerce Department said consumer spending increased in October after two lackluster months, but the nation's retailers reported mixed results in November.
The Labor Department also reported that the number of Americans filing new claims for unemployment benefits posted an unexpectedly large increase last week, rising by 34,000 to 357,000.
Meanwhile, Germany said that its unemployment rate dropped unexpectedly to 9.6 percent in November as the number of people out of work fell below 4 million for the first time since October 2002 -- the latest evidence of a gathering recovery.
The pound climbed to $1.9661 in afternoon New York trading from $1.9462 late Wednesday in New York, marking its strongest showing against the dollar since September 1992, before Britain crashed out of the European Exchange Rate Mechanism.
The euro rose to $1.3250, up from $1.3156 late Wednesday. The euro has risen from below the $1.30 mark over the past week amid expectations that the European Central Bank will continue to raise interest rates, while the Federal Reserve holds, or eventually cuts, rates.
The dollar slipped against the Japanese currency, falling to 115.75 yen from 116.31 yen.
U.S. economic data are being watched closely for pointers on the Fed's interest rate course, and disappointing news recently has dimmed the prospect of higher interest rates in the world's largest economy. Higher interest rates, a weapon against inflation, tend to strengthen a currency by making investments in it more attractive.
Analysts suggested that the new U.S. data indicated the Fed will likely keep rates unchanged for the time being.
"Inflation remains stubbornly above the Federal Reserve target range of 1 to 2 percent, despite flagging growth in the second and third quarters. The Federal Reserve is not likely to risk additional inflation to shore up the economy by lowering interest rates," Peter Morici, a professor at the University of Maryland School of Business, said in a research note.
Federal Reserve "Chairman Ben Bernanke will want to make sure inflation is safely boxed before stimulating the economy, even if that risks a recession," Morici said.
Analysts said the pound, which is benefiting from rising home prices and merger and acquisition activity in Britain, could reach $2 by the end of the year. It last reached the $2 level on Sept. 8, 1992.
In 1992, the British government raised base interest rates as high as 15 percent in a futile effort to defend the pound's value against the German mark. After Britain dropped out of the Exchange Rate Mechanism, which was meant to eliminate exchange rate fluctuations in Europe, the pound plummeted to around $1.50 by the end of 1992.
In other trading, the dollar bought 1.1982 Swiss francs, down from 1.2090 late Wednesday, and 1.1420 Canadian dollars, up from 1.1380.
"Meanwhile, Germany said that its unemployment rate dropped unexpectedly to 9.6 percent in November as the number of people out of work fell below 4 million for the first time since October 2002 -- the latest evidence of a gathering recovery."
They've been in a recession since October 2002? That's 4 years and then some. And they consider 9.6% unemployment to be GOOD.
The value of the dollar vs. other major currencies may be the truest indicator of what the world expects from America's most recent election results (not that Bush policies have been very supportive of a strong dollar). Keep an eye on this one, folks.
"They've been in a recession since October 2002? That's 4 years and then some. And they consider 9.6% unemployment to be GOOD."
Socialists. When Jimmy Carter, (a true socialist), was president, he told us that mortgage rates of 15% were good rates. Unemployment was so out of control I joined the Navy. You couldn't buy gas whenever you wanted, it was expensive and rationed.
But the liberals think Jimmy was one of the better presidents we've had and they love him even more now.
morons.
"Americans filing new claims for unemployment benefits posted an unexpectedly large increase last week, rising by 34,000 to 357,000."
Is this a typo...someone??
I doubt it. Less than 400,000 is considered a growing economy.
Apparently, it was 323,000. Now it's 357,000.
Socialists. When Jimmy Carter, (a true socialist), was president, he told us that mortgage rates of 15% were good rates.
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Good catch. These are socialists in Germany -- and any employment is good :-) --- all socialists are morons because they fail to recognize that socialism cannot pay for itself and it always fails as the EU is failing.
Carter, God help us, is another horror story onto itself.
Forgive my ignorance, but why is this bad news for anyone other than currency traders and Wal-Mart?
China has deliberately kept the value of their currency in the dirt for years, and its economy has boomed as a result.
That is not a typo. Of course it could be claims dropped by 45k next week.
No, they were in recession in 2003 (-0.1%) and the growth was flat in 2002 (0.1-0.18).
While ditty-bopping around in my yute, I absconded from the land of the rising sun with a bunch of 1,000 yen notes when the rate was 360 yen to one yankee dollar. (Pachinko anyone?)
Shoulda brought back more.
one reason is that we import so much oil.
It will result in higher prices for imported goods. Because of our dependence on foreign oil, this will raise the cost of all products sold in the US.
I find it very hard to believe that euros would be stronger than the US dollar.
It's been that way pretty much from the day they started selling euros. "Stronger" is kind of a misnomer, though. They are worth more because their central bank has not printed money as fast as ours. They think that's good. But they are in a chronic recession, so it's obviously not working.
That was the prior week, though. I think the numbers are accurate. The issue, though, is whether more jobs are being lost than created. I don't think that's the case.
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