Dollar hits 14-year sterling low; euro/yen at new record

[TexasLawyer]

Dollar hits 14-year sterling low; euro/yen at new record
European currencies rally on hopes of further interest-rate increases

By Wanfeng Zhou, MarketWatch
Last Update: 4:14 PM ET Jan 23, 2007


NEW YORK (MarketWatch) -- The dollar fell to a 14-year low against the British pound and two-week low versus the euro Tuesday, on growing expectations of further interest-rate hikes in Europe and as oil prices rebounded.

The pound rallied sharply, with traders flocking to the U.K. currency amid expectations that this month's surprise interest-rate increase may be followed by another upward move. Sterling also benefited from gains in the euro sparked by surprisingly strong French economic data.

The dollar's "new year recovery appears to be losing momentum, with a lot of good news already in the price," said Mitul Kotecha, head of global foreign-exchange strategy at French bank Calyon. "We believe that interest rate markets are overly hawkish in the U.S. and overly dovish in the euro zone."

The dollar "is likely to find it tough in making further headway over coming weeks."

<snip>

http://www.marketwatch.com/news/story/dollar-hits-14-year-low-vs/story.aspx?guid=%7B92E8E138-C943-4A4E-90A3-6DF76FC5F2AE%7D

[aquart]

1. More good news for the SOTU.

I wonder if they have to shake the applause meter to see if it's stopped working?

[SpiralHawk]

2. Thanks a pantload, Commander AWOL & corrupt republicon cronies

Another Miserable Failure. As usual.

[whistle]

3. 14 years ago it was Bush 1 who was president and he nearly

...tanked the U.S. economy back then with interest rates over 12% on fixed home mortgages. I think the Bush crime family is in bed with British bankers who want to see the U.S. economy ruined and take us back as a British colony. I AM NOT KIDDING!

The signs all point to that. Our real enemy is the United Kingdom anglo/Dutch banking system

[Stella_Artois]

4. Thats interesting

Most people think its the Chinese.

[Possumpoint]

7. For Crying Out Loud

Let's put the blame where it belongs. For the past 50 plus years deficit spending by our federal government was considered to be a good thing. We weren't on the gold standard and silver certificates were stopped in the early 70's. Our money is paper being printed out of thin air. When the government needs more money they up the debt limit and print some more.

Our economic growth for the past thirty years or so has been financed by foreign investors. We now owe more in interest then we give in foreign aid each year. In the mid 1970's, in an effort to avoid another oil embargo, the market was changed to oil going to the highest bidder in dollars. We have flooded the world with paper dollars to the point where other countries are now losing confidence in our ability to continue with the status quo.

We are the problem. Both Republicans and Democrats have gotten so use to earmarks, entitlements and congressional pork that we've lost sight of real fiscal responsibility. We don't pressure congress to straighten up and I'm not sure they'd pay any attention to the demands anyway unless it was close to election time. Then we'd get some half heated, empty promises.

You want to get sickened by reality? Go read the GAO reports on government spending and what they think it would take to straighten out this mess.

To quote Pogo "I have seen the enemy and it is us".

[pitohui]

10. you may be the problem, i'm not the problem

i'm tired of being told "we" are the problem

"we" are not the problem, bill clinton left this country with a huge surplus

there is no "we," this is a democratic site, the republicans are the thieves who looted this country, always have been always will be

[whistle]

16. Correct, if you want to steal, pillage and rape like a pirate vote republican!

...If you want to work hard and save this country for our children, our grandchildren and the children of our grandchildren then not only vote like a democrat, act like one also!

[Possumpoint]

22. Simplistic View

Both sides of the isle need to change. Not all Democrats are great and not all Republicans are bad. I reserve the right to pick and choose.

[The Stranger]

34. Republicans think (or fail to think) and vote in blocks, so they are FAR MORE LIKELY to be ALL bad.

And that is true FAR MORE OFTEN than Democrats.

And, yes, because of this block voting block mentality, at times, all Republicans ARE bad.

[MGD]

27. Right now, I'm more interested in saving it for me to tell you the truth

We'll have to save it for our children, grandchildren, and the children of our grandchildren later I think.

[Possumpoint]

20. Deliberately Ignorant

If you chose to ignore reality that's your right. You believe whatever you want to. I'm not denying the surplus under Clinton and know full well what Bush has done since then. But there is a bigger picture and a lot of history and economic decisions you're ignoring. Both sides of the isle are at fault. Both parties need a kick in the pants and this country needs a redirection on it's fiscal policies. Otherwise we're liable to revisit the misery our grandparents and great grandparents experienced in the 30's.

[struggle4progress]

17. You realize that at current rates our national debt will have doubled during King George's reign?

[Possumpoint]

21. YES!

I believe that President Bush will go down in history as one of the worst modern presidents. His failure to properly manage the federal fiscal policies will have adverse consequences for decades. Our grandchildren will p*ss on his grave for what he did.

That just one of the reasons I think so little of Bush.

[struggle4progress]

24. You also realize that under Clinton deficit spending ended and the national debt started ..

.. to decline? And that Clinton outlined a path for eliminating the national debt by 2010? And that the first thing King George did was to get rid of the "surpluses" that would have eliminated the debt?

[MGD]

26. He didn't get rid of the surpluses, he redistibuted them with selective tax cuts & deficit spending.

[davekriss]

33. To modify Pogo

"I have seen the enemy and the enemy are Republicans". Clinton led us from the record federal deficits of the GHWB administration to record surpluses, very welcome ahead of the coming retirement of the baby boom generation. The GWB administration reversed that, returned and surpassed the deficit levels of his father.

The only ones to blame are the borrow-and-spend Republicans, wholly a disgrace to our nation, especially those in power since January 2001.

[Mudoria]

5. Not all that bad a deal

since a cheaper dollar means American exports are cheaper and raises the prices of imports. Maybe the trade deficit will start narrowing a bit in the near future.

[Casablanca]

11. There are a lot of exceptions to that rule.

In the recessions of the early 80s and 90s it was largely foriegn investment and foreigners buying American products that helped us out. In the most recent recession, that didn't happen anywhere near the extent that it did in past "cycles".

It's been said that bad foreign policy on the part of the government translates into decreased sales for American products and decreased foreign investment, and the Bush II Recession proves that. I think it's now a question of when the corporate benefits of American imperialist power are counterbalanced enough by global disdain for Brand America. When that happens we'll see a lot more companies like Cisco relocating lock, stock, and barrel to India, and the American economy won't get the benefits of having cheaper exports.

[TexasLawyer]

6. Murphy's law

Of course TODAY would be the day that I put down a deposit-- in pounds sterling-- on a flat that I'm renting in London over spring break.

Drat the timing!

[roamer65]

8. The anti-dollar (gold) is up to $645 an ounce.

[lonestarnot]

30. Damn!

[muriel_volestrangler]

9. If there's a further 1% change or so, it will be a 25 year low against the pound

http://www.miketodd.net.nyud.net:8090/encyc/dollar-recent.gif

[Lydia Leftcoast]

13. And those previous highs were back when the old monetary system

held sway, with shillings, half-crowns, sovereigns, and all that confusing (to an American teenager) stuff--and when the UK was a low-price country and people measured their weekly wages in shillings. :wow:

[dipsydoodle]

15. sovereigns ?

:rofl: You got the others right which went out the window in 1971. :)

Sovereigns are gold and had been worth more than their £ 1 face value for a considerable period of time.

[Art_from_Ark]

25. You are right, of course

Sovereigns (and half sovereigns) are gold coins that were minted for circulation until their gold value exceeded their supposed (but never explicitly stated) face value of £ 1 as a result of World War I. They've been issued as bullion coins off and on since then.

[Canuckistanian]

12. Too bad the US doesn't produce anything

Or else the increased sales would bolster the current account.

[Psephos]

19. The US is the world's largest single-nation industrial economy

That's right, industrial, not service.

Don't shoot the messenger here. Just pointing out that the myth is different from the reality. Take a look at the figures for China for some more myth-busting.

http://en.wikipedia.org/wiki/List_of_countries_by_industrial_output

[entanglement]

29. The "we don't make anything anymore" myth is so widespread, even here on DU

n/t

[nealmhughes]

14. To our friends in Europe and Asia with yen and euros to spare:

buy dollars now! It most probably will rise again in a few months, and you'll make out like Flynn! I did it in the UK in the early 80s. Bought 2000 L sterling and waited a year. Had a hell of a time when the pound went up from its low of $1.08 when I bought!

[Art_from_Ark]

36. Buying dollars with yen

The dollar right now is at a 4-year high against the yen. It might not be so prudent to be buying dollars with yen at this time (although I wish I had stocked up on dollars when they were at 102 yen, instead of the current 121+ yen)

[struggle4progress]

18. Nothing says "economic boom" quite the way a major currency crisis does

[MGD]

28. It's a boom for someone somewhere...

in another country.

[teryang]

32. Japan stock market re-enters bubble phase

Look out below!

[Psephos]

23. Contrary to "common" sense, this has much more upside than downside

Though you wouldn't know it in this thread.

The good: US tourism becomes a bargain for foreigners, to the enrichment of hotels, restaurants, airlines, venues, etc. But it's US industries (manufacturing, services, and agriculture) that reap the biggest rewards. Foreign buyers can buy more with their Euros or yen or whatever when shopping here than at home. Exports surge. Jobs are created. Tax revenues increase.

The bad: US consumers face higher prices for imported goods, and the economy feels general inflationary pressure, as the dollar's overseas purchasing power declines. (I might argue that decreases in import consumerism aren't so bad, after all.) Another problem comes with oil, which has traditionally been priced in dollars. Oil producers have been raising prices above market conditions to compensate for their currency-exchange losses.

The ugly: the dollar is weak against the Euro, which means the benefits reaped in North America come at the expense of EU. (This is of course an oversimplification.) For an export-dependent economy such as Germany's, that creates big problems. Italy and France, to name a few more, suffer disproportionately when their exports are priced out of the US market. We are all in the same boat, ultimately. An EU weakened by US resurgence just kicks the can down the road. Who, exactly, will the US sell to when its customers are picking lint out of their pockets?

Bottom line: currency fluctuations are cyclical, and tend to be self-correcting. If you don't understand why, do some reading. Meanwhile, the current weak dollar is at worst a neutral thing for the US, and many think it's a net benefit, at least in the short term. Stuff from China (and elsewhere) costs more at Wal-Mart, while stuff we make here sells better overseas. Oil stays high-priced, which encourages searches for alternatives while increasing conservation. Sounds ok to me.

Peace.

[Javaman]

31. So is this some of that "economy is strong" bullshit moron* was spewing

about last night?

the world is waking up to our fiat petro dollar economy.

As the oil nations change more and more over to euros, china will not like that and start calling in their T-Bonds, then where will we be?

In deep shit, that's where.

[sakabatou]

35. Gee, I wonder why that is...

hmmm.