US dollar Drops Again, Federal Reserve Decision Looming

The US dollar declined again against several major currencies, as most markets look toward the decision of the Federal Reserve later in the week, which most expect will cut the rate by a quarter point. Even so, the unsurety of what the Fed will do has investors holding back on the greenback until the decision is revealed.

Performing strongly against the dollar was the euro again, which climbed to $1.5645, an increase over the $1.5593 in New York on Friday. The British pound also did well, rising to $1.9900, up from $1.9818.

Also gaining was the Swiss franc, with the dollar buying 1.0353. That was down from what the dollar bought on Friday: 1.0367. The Candian looney also strengthened, ending at 1.0119, in contrast to 1.0164 the U.S. dollar bought on Friday as well.

Another factor in the ongoing weakening of the dollar is the high inflation in Europe, which pretty much guarantees rates won't be cut over there.

Most think there will be a cut on Wednesday by the Fed, and that they'll probably hold cuts for some time.

US dollar Strengthens Against Most Major Currencies

With the exception of the Canadian dollar, the U.S. dollar gained against the major currencies today, including its best performance against the euro since December 2007. The euro finished down 0.0209 to end at 1.5679 against the U.S. dollar.

The U.S. Dollar Index ended up by 0.757 points to finish at 72.575. The Index measures the US dollar against the Canadian dollar, pound sterling, Swedish krona, Japanese yen, and euro.

"Now that we tried and failed to stay above $1.60 in euro/dollar, it looks like we're coming back to the bottom," said Brian Dolan, head of research at consultancy Forex.com, in Bedminster, New Jersey. "The U.S. data today is pretty clearly dollar positive and we're coming off some weaker European data."

The Zurich-based UBS AG looks at the euro's performance against the dollar to fall in the range of $1.47 in three months, while within a month it projects it to be at about $1.55.

Better-than-expected employment news and strengthening of the dollar has investors and analysts wondering which way the Fed will go at their meeting next week as far as rate cuts go. It looks like it could be a toss up whether the expected quarter-percentage-point cut will come.

U.S. Dollar Mixed Against Latin American Currencies

The U.S. dollar was mixed against its Latin American counterparts, as it fell to a multi-year low against the Mexican peso, while also falling against the Colombian and Chilean pesos on Friday.

Against the Brazilian real the U.S. dollar increased from multi-year lows, while it also gained against the Peruvian Sol.

Citing inflation concerns over food and commodity prices, the Mexican central bank held interest rates where they were, as inflation was higher than expected in the early months of 2008. The dollar ended the session at 10.4706, after falling to a low of 10.4348.

After falling to muli-year lows earlier in the session, the dollar gained some back against the Brazilian real, reaching a high of 1.6730.

At about mid day, the dollar fell to a low of 454.75 against the Chilean peso, in contrast to the high of 459.65 it reached on Thursday.

Against the Peruvian Sol the dollar went as high as 2.7235, after reaching 2.7175 the day before.

The Columbian peso gained against the U.S. dollar, as it went to 1786.00 on Friday, after weakening at 1794.50 earlier in the day.

Investors Ignore G-7 Currency Shift

Seeming to think the the warning by the G-7 about steep fluctuations in the exchange rates could cause harm to the global economy, French Finance Minister Christine Lagarde talked down to investors saying they don't understand the significance of the G-7's shift in its outlook on exchange rates.

That was in response to the ongoing decline of the dollar which is starting to impact exports from the strengthening currencies of other countries.

Legard said in an interview: "It's a strong statement which I am not sure the markets have yet fully understood and appreciated."

My thought is: Who cares? That's why it's called a market, and market forces are impacting the currency rates; that's how it should be. To attempt to strenghthen the U.S. dollar so European companies can benefit doesn't do anything for Americans.

Until there are real actions taken, rather than just talking the talk, most investors aren't going to sell their euros or other strong currencies in order to listen to some bureaucrats who want their interests to be put ahead of others.

U.S. Dollar Weekly News Roundup

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US dollar rises against Chilean peso on news of Central Bank intervention

The U.S. dollar closed 2.85 percent higher against the Chilean peso Friday after the Central Bank announced it will buy up to US$8 billion (euro5 billion) of the currency this year, a move expected to halt the dollar's recent slide here.

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Yuan up 4.3% against US dollar in 2008; 18.3% since Jul 05

The Chinese currency broke this week the psychological benchmark of seven Yuan to the US dollar which could signal a change of policy in Beijing since a stronger currency should help fight inflation and makes food and energy prices cheaper.

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Canadian dollar closed 0.44 of a cent lower to 97.71 cents US

The Canadian dollar closed at 97.71 US, losing 0.44 of a cent on Friday. The U.S. dollar stood at 102.34 cents Cdn, up 0.46 of a cent.

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The Gulf Common Currency: Implications for the U.S. Dollar

Amidst the US Dollar’s recent depreciation in the global marketplace the looming adoption of a common currency by the Gulf Cooperation Council has weighed down on the minds of many economists and market participants alike. With the adoption of the common currency tentatively scheduled for 2010 it is worth examining both the motivations for a common currency, and its implications in the global marketplace.

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Falling US Dollar and Trouble with the Trade Deficit

Ever since the falling dollar really hit the radar screen of the mainstream media, one predictable, knee-jerk response was that this would be a miracle elixir for our ailing export economy. Further, they asserted, the weak dollar would cure the trade deficit.

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Early U.S. copper futures fluctuate with dollar

U.S. copper futures at the New York Mercantile Exchange's COMEX division fluctuated in early business on Friday, with the market taking its short-term cue from the volatile swings in the U.S dollar, traders said.

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Dollar in Small Dip after Fed Minutes Released

The dollar pretty much shrugged off the news from the Federal Reserve minutes released today, which had an outlook of contraction in the short term for the U.S. economy.

"There was little dollar reaction to the [Fed] minutes, where the key takeaway was the Fed's concern over the potential for a severe downturn," analysts at Action Economic said in a note.

Even the continual poor U.S. housing market didn't rattle the greenback today, as it only declined slightly on the dollar index, dropping 0.3 percent to 72.20. Before the Fed minutes were released, the index stood at 72.23.

The housing report showed pending home sales had declined by over 21 percent from the February 2007.

Against the euro, the dollar fell to $1.5731 before the data was released, where it stood at $1.5717 before. For the yen, the dollar rose by 0.03 percent to 102.36, in contrast to 103.41 before the reports were released.

Weekend Eye on the U.S. Dollar

Dollar News around the Web


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Dollar Falls Versus Euro as Job Losses Raise Recession Concern

The dollar fell against the euro and dropped the most versus the yen in a week as a government report showed the U.S. lost jobs for a third straight month in March, increasing concern the economy is falling into a recession.

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U.S. payrolls data push down dollar

The U.S. dollar fell to session lows Friday after the economy lost more jobs than economists had forecast, putting a renewed spotlight on worries about the depth of the U.S. economic downturn.

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50 million Zimbabwean dollar is one US dollar

The Reserve Bank of Zimbabwe (RBZ) has introduced a new note worth 50 million Zimbabwean dollar to deal with rampant shortages of cash in an economy that is also grappling with the world's highest inflation rate of over 100,000 percent.

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Canadian dollar ends winning week on a lower note

The Canadian dollar closed lower versus the U.S. dollar on Friday as data showed job growth moderated in Canada in March after two solid months, but the currency still ended the week with a 1.2 percent gain.

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US dollar futures offer on Indian stock exchange

The US Futures Exchange will start offering today (April 4) the first US-dollar denominated futures contract linked to India’s SENSEX stock index. The USFE has exclusively licensed the Bombay Stock Exchange’s benchmark SENSEX Index for US dollar-denominated futures trading.

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The falling dollar and remittances

The impact of the dollar depreciation on remittance flows to developing countries has emerged as a serious subject of study amongst economists and policy analysts. In particular, the impact of remittance flows for the Philippines, Mexico and India, the three countries among the largest remittance-recipients, is of immediate concern for economists and policy planners.

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Volatility Should Continue for U.S. Dollar

The U.S. dollar was mixed today, as it fell strongly against the Canadian and Australian dollar, and the British pound.

It did manage to gain against the euro based on Eurozone Retail Sales, which fell by 0.5 percent. It also gained strongly against the New Zealand dollar, as the ANZ Commodity Price index reached a record high.

We'll get a better picture of the effects on the U.S. dollar with the various reports set to be released on Friday, as Non Farm Payrolls figures will come out, followed by Non Manufacturing Payroll and the Unemployment rate.

A report on the Average Hourly Earnings will also be released, giving a snapshot of the overall, general economic picture.

Dollar Falls on Economic Data

Comments from Federal Reserve Chairman Ben S. Bernanke that the U.S. economy could possibly contract in the first half, caused the U.S. dollar to slide against the euro for the first time in three days.

"Bernanke confirmed what the market is feeling about the economy," said Samarjit Shankar, director of strategy for the global markets group in Boston at Bank of New York Mellon. "It put some pressure on the dollar."

Against the euro, the U.S. dollar dropped by 0.5 percent to $1.5695 in New York, down from $1.5614 yesterday. Other major currencies it fell against were the English pound, Brazilian real, Icelandic krona, Australian dollar, South African rand and the Norwegian krone.

Most traders say there is about an 88 percent chance the Fed will cut the lending rate by a quarter-percentage point on its April 30 meeting. They also say the chances of a half-percentage point cut stand at 12 percent.

U.S. Dollar Gains Triggering Commodity Selling and Losses

The U.S. dollar gained some strength today, as manufacturing data from the United States, as well as retail sales in the U.S. increasing last week helped prop it up.

News of the Swiss Bank UBS and Deutsche Bank of Germany that they will be writing down $23 billion also helped the dollar out for now.

"We look for the U.S. dollar to generally guide pricing today now that military activity in southern Iraq has subsided and most financial markets are showing some stability," said Jim Ritterbusch, president of Ritterbusch & Associates.

Commodities were widely down, as oil, gold, copper and wheat all fell on the dollar's rise. It was the third straight day that oil fell.