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Currencies Updates

Dollar decline continues as stocks jump

11/23/09 16:42 EST

NEW YORK -The safe-haven dollar began the week lower as a Federal Reserve official urged the continuation of stimulus programs and as home sales in October greatly exceeded market expectations, revving up traders' taste for higher-yielding assets.

Gold prices surged to a new record high of $1,174 an ounce as investors looked for an alternative investment to a declining buck. The commodity is considered a hedge against the greenback because of its stable store of value.

In late New York trading Monday, the 16-nation euro rose to $1.4973 from $1.4857, while the British pound jumped to $1.6621 from $1.6481. The dollar was nearly flat at 89.02 Japanese yen from 88.96 yen.

Over the weekend, Fed official James Bullard said the central bank should continue to buy mortgage-backed securities, helping keep interest rates low, beyond the program's expiration in March. The Fed has committed to buying $1.25 trillion in the securities. Media reports said Bullard's comments followed a speech in New York on Sunday.

Continued low rates mean investors don't make much on their dollar-denominated investments, prompting them to transfer funds to where they can earn better returns.

Bullard is slated to be a member of the Federal Open Market Committee, the Fed committee that sets interest rates, next year, so investors watch his statements closely. Membership rotates among the country's regional Fed presidents.

Last week Bullard said that if the Fed acted according to historical precedent, it could wait until 2012 before raising interest rates.

European Central Bank officials are hinting that details of how to wind down eurozone stimulus measures may be released at its December meeting, analysts said.

Meanwhile, traders were increasingly likely to sell the dollar in favor of "risky" trades on the back of positive economic reports. New data also showed that economic recovery is gathering pace in the 16 countries that use the euro, while in the U.S., the National Association of Realtors, an industry group, said sales of existing homes shot up 10.1 percent from September to October. They hit a seasonally adjusted annual rate of 6.1 million last month, the highest level since February 2007.

A recovery in the housing market is viewed as essential to a broader economic rebound.

That drove stocks higher and the dollar lower. The two have tended to trade inversely ever since summer 2008 as better-than-expected reports boost stocks and recessionary developments propel the safe-haven dollar.

In Monday trading, the Dow Jones industrials jumped 1.3 percent, and broader markets were up 1.4 percent.

The dollar also weakened to 1.0093 Swiss francs from 1.0182 francs, and fell to 1.0553 Canadian dollars from 1.0714 late Friday.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
COMMENTS ( 31 )
Page 1 of 7 1 2 3 4 5 6 7 Next >>
DKJAW12
6:48PM Nov 19 2009 
Take a look at this I found. You can get a 4 day free trial for a trading system that works with Forex, Futures, Stocks, Bonds and Commodities. Just go to http://forex-currencyexchange.com and click the top left link.
REPLY RATING
(0 RATINGS)
 
HrrPa9
11:47AM Oct 29 2009 
HBaldo there in lies the question. We continue this assinine attempt to control the intractable with the elected/appointed best and brightest. It never works and never will. So much of U.S. profits remain overseas that such transfers as happens tend to be of quantitative amounts that currency valuations become rocky at best. Small timers can only act as trailers. We find at closer examination most politicians are already quite wealthy. Their pursuits remain vain attempts at self agrandisement. The moral and ethical reasons our founder's had has been replaced by such vanity that effective representation and governing by rational decision making has been reduced to a snickering event.
REPLY RATING
(1 RATINGS)
 
HBaldo
4:21PM Oct 22 2009 
Yes, what to do! The Fed attempted market operations in the 80's but it became evident that the market was so big that it was soon realized that intervention to control the exchange rate of such a massive economy was impossible. What is driving the Euro/$ rate are market forces and many other conditions such as capital flight to and from the US. There are probably people out there who may have an understanding of the relative importance of the significant variables at different times and are benefiting from the decline of the Dollar. However, their knowledge is price sensitive information they are not going to share with world. Unfortunately those individuals will not work for the Fed or the Treasury for many good reasons, compensation probably being one of them. A really knowledgeable trader will receive compensation no government official could ever receive. It appears that even the government actions to regulate foreign exchange related derivatives used for hedging purposes will make it even more difficult for corporations to shield themselves from foreign adverse exchange fluctuations.

Thus, media talk about the government’s failure to step in and force a desired Euro/$ rate is really no more than an expression of faith on the omnipotent power of the government. Given the serious dislocations of the world economy from the Fed keeping domestic rates too low for too long and contributing to the real estate bubble is an indication that all of the government’s economists together simply cannot match the performance of many private sector business analysts. What amazes me to no end is that the journalists completely ignore the Fed/Treasury’s statements in the 80’s that the foreign exchange market for US Dollars is so large as to be beyond control by the government authorities.
REPLY RATING
(2 RATINGS)
 
HBaldo
4:21PM Oct 22 2009 
Yes, what to do! The Fed attempted market operations in the 80's but it became evident that the market was so big that it was soon realized that intervention to control the exchange rate of such a massive economy was impossible. What is driving the Euro/$ rate are market forces and many other conditions such as capital flight to and from the US. There are probably people out there who may have an understanding of the relative importance of the significant variables at different times and are benefiting from the decline of the Dollar. However, their knowledge is price sensitive information they are not going to share with world. Unfortunately those individuals will not work for the Fed or the Treasury for many good reasons, compensation probably being one of them. A really knowledgeable trader will receive compensation no government official could ever receive. It appears that even the government actions to regulate foreign exchange related derivatives used for hedging purposes will make it even more difficult for corporations to shield themselves from foreign adverse exchange fluctuations.

Thus, media talk about the government’s failure to step in and force a desired Euro/$ rate is really no more than an expression of faith on the omnipotent power of the government. Given the serious dislocations of the world economy from the Fed keeping domestic rates too low for too long and contributing to the real estate bubble is an indication that all of the government’s economists together simply cannot match the performance of many private sector business analysts. What amazes me to no end is that the journalists completely ignore the Fed/Treasury’s statements in the 80’s that the foreign exchange market for US Dollars is so large as to be beyond control by the government authorities.
REPLY RATING
(0 RATINGS)
 
LGBAILEY
7:58PM Oct 21 2009 
for any foreign exchange conversion try xe.com. It is the best....
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(0 RATINGS)
 
Page 1 of 7 1 2 3 4 5 6 7 Next >>
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