Reply #30: U.S. stocks come under pressure

[ozymandius]

Dollar under the gun; Treasury bonds plunge

The dollar's tumble followed a statement after a weekend meeting of finance ministers of the world's top industrial nations, which endorsed flexibility in exchange rates. The greenback plunged to its lowest levels against the Japanese currency since January 2000.

"We're seeing a reflex reaction to the G-7 statement. The market is telling you that it's very concerned about the dollar," remarked Jay Suskind, director of trading at Ryan Beck & Co.

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"The worry in the financial markets relates more to concerns over how the dollar's weakness will affect international capital flows than to its potential effects on the U.S. economy. Big budgets and trade deficits are at the root of these worries," Crescenzi said.

"An important factor working against extensive weakening in the dollar is the fact that the G-7 statement contained no enforcement mechanism nor did it indicate that the policies that have artificially boosted the dollar against Asian currencies have been changed," the strategist concluded.

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