Posted on 11/20/2007 4:40:40 AM PST by DeaconBenjamin
The dollar fell to a record low against the euro on Tuesday as rumours swept the currencies markets that the Federal Reserve was set to deliver an emergency cut in US interest rates.
Traders said the talk was that that the Fed would cut interest rates when it released its new growth forecasts and the minutes from its October meeting at 19.00GMT.
The dollar fell 0.9 per cent to an all-time low of $1.4797 against the euro, dropped 0.7 per cent to $2.0640 against the pound and lost 0.8 per cent to SFr1.1070 against the Swiss franc.
Neil Mellor at Bank of New York Mellon dismissed the speculation, however.
“The Fed will want to keep its options open,” he sad. “By introducing an emergency rate cut, it would send the wrong message out to the market and seriously undermine its credibility.”
Indeed, David Woo at Barclays Capital said the likelihood was that Fed’s economic projections would be more upbeat than expected.
“With the market relatively confident about the prospects for a rate cut in December, the risk is these expectations will be disappointed somewhat, which would be positive for the dollar,” he said.
Meanwhile, stability on Asian equity markets put pressure on the yen as a pick-up in risk appetite saw the yen give back Monday’s gains.
Analysts said heightened risk appetite had prompted renewed demand for carry trades, in which the low-yielding yen is sold to finance the purchase of higher-yielding, riskier assets elsewhere.
The yen fell 0.3 per cent to Y110.10 against the dollar, lost 1.1 per cent to Y162.88 against the euro and dropped 1.1 per cent to Y227.29 against the pound.
However, Derek Halpenny at Bank of Tokyo-Mitsubishi said yen sell-offs were becoming less convincing by the day and he doubted the return of risk appetite would be prolonged.
He said the key signal of impending trouble for the financial markets in August was the sudden loss of liquidity in the money markets that triggered a spike in short-term money market rates.
“The very same development is now taking place again,” he said. “With financial markets in stress again, the scope for yen weakness looks limited.”
>> MSM will turn Bush into Hoover, and Hillary into FDR, our savior. I hope I’m wrong.
Boy oh boy do I hope you’re wrong. I pray you’re wrong.
But I fear you may be right.
Mommy, Travis McGee is scaring me!!!
You stated my fear. I’m terrified that 2008 will start in recession and make wonderful headlines for the MSM to trumpet, so as to get Hitlery elected in the fall. I really think that is the ONLY chance The Beast has to get elected.
You know, if cutting interest rates would push this recession back until after the elections, then I could hold my nose and live with killing the dollar one more year. But the rate cuts won’t work, we will get the recession anyway and maybe Hitlery too.
Scary stuff.
Very scary. Interesting times, way too interesting.
"We've been doomed before: 1982, 1987, 1989, 1991, 1998, 2001, and yet we make it out bigger and better."
“Do you have any clue exactly how much worthless US$ denominated paper is cramming the vaults of the rest of the world? It was our #1 export.”
Hmmm. I believe the #1 export in paper from the US was porn? All kidding aside we had best pray we do not see any serious WMD attack on our country or see the ME go up in a fireball. That will be the tipping point for economic crash and burn. Unfortunately, our enemies know this also.
I see a way out. Make alternative energy THE national priority. Accelerate biofuels and coal liquification to the nth. If the worst case scenerio does unfold, our country could still ship vital food and medical supplies to prevent anarchy.
If all stays calm and we simply see a deep correction/recession then the competing product would help reduce our consumption and lower oil prices. This would create a lot of jobs and with full government support investors would flock to jump in. Win-win either way. The real issue, greed and foolish, premature notions of the new world order. Let’s play who wants to be an God fearing American leader, shall we?
I sent an email to our management team in June that we are going to revise our 3 year exit at the end of 2009 to an early exit at the end of 2008. 2009 is going to be called the year of pain I believe. I love market research and history. You can now Google anything you ever needed to know to minimize risk.
Sigh... So true and so sad.
I don’t think your wrong. I think she will be elected because of the out of control cost of living for the middle class. Americans have had a very long stretch of comfortable wealth building in the 90’s and then easy access to credit continuing the party. She has already started blathering as I expected her to about how she will return the economy to the glory of the 90’s.
Reality is, Bill Clinton inherited many economy advantages built by the Republicans. I have to give him some credit where it is due in this regard but of course it meant nothing over the long haul considering nuclear espionage being allowed by China for campaign cash along with sensitive dual technology sales such as ICBM. Of course this was widely proliferated, gotta love our wonderful trade partners! Oh yeah, doing nothing about terrorism didn’t help much either for the economy after 911. We’re on the same page Travis.
Lack of accountability at the top from both sides of the aisle.
The buck is all about "liquidity".
Try selling anything on a foreign exchange in 5 seconds let alone commodities.
yitbos
Well Travis, I seem to enjoy responding to you today so let me say this. This terrible financial pain coming may unite us to have to watch each other’s backs and become true patriots and brothers as was the case in prior generations. Our nation just seemed to have gotten away from that after the Reagan era. Big war is coming, we can all smell it. But if we are united we will either avoid it because our enemies know they will be crushed by attempting to further undermine our society of crush them for attempting it period.
What, on a doom and gloom thread? There's enough despair on this one to create the greatest bull market of all time.
The dollar is so oversold it can only look up. Of course Goldman Sachs said the same thing about a month ago. BUT the currency markets are the best trending markets in the world. It could go lower. But it's not the end of the world.
Has anyone noticed what is rising in price during all of this? No? Good old American debt. Treasury bills, notes and bonds denominated in, yes that's right, greenbacks.
What we really need to watch out for is deflation in 2008.
forgot to ping you
Well then, the big boys can clean up by jumping in, snapping up futures and squeezing the shorts like there is no tomorrow. Why haven't they?
Oh, its exceptional all right, but right now we are about to experience an
exceptional hangover!
The central bank doesn't want runaway inflationary expectations because there will be political ramifications if Joe can't afford his SixPack.
hey, your having the same nightmare I am!
makes me think this has all been planned out by the Illuminati or the Gnomes of Zurich or the CFR even!
Robert Anton Wilson knew!
Cool, another pay cut for all Americans! Let’s borrow even more money from the Chinese communists!
we’ll have to rename J6P to JMD20/20!
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