Euro rises above $1.20

Thanks.

I wonder though, is that precisely what is going on with the chinese market at the moment.

After all, USA does borrow heavily from China!

Fortunately, there's not only the US-market in the world!

Unfortunately for the USA, however, some investors (and about 70% of the invested money money in the USA is foreign owned!) might think of a better deal than loosing their money.



In today's papers I read that quite a lot of professional athlets are going off because they get now (while paid in Dollars) even less than two years ago (although nominaly they get x-%'s more). :wink:

I think you are mixing apples and oranges. The fact that foreign money will cease to be invested in our paper because of the falling value of the dollar is indeed a worry. However, the loss of jobs related to disparity in labor costs, off shoring is another.

BBC Business News announced yesterday that with the decline in the value of the USD that GOLD bullion was now on the increase for investors.

It has reached a 15 year high, apparently.

Walter.
True, there are other markets in the world however, can the European price structure compete any better with them than the US has been able to do. Presently, from some of the articles I have seen off shoring in the EU has been the loss of industry to the newly incorporated and low cost nations of the EU.
In any event the falling $ may help lower the US balance of payments by making our products more competitive. How much and for how long who is to say.

FRANKFURT Will the European Central Bank intervene in the world's currency markets to put a lid on the euro?.
It has become a tantalizing prospect for many Europeans, who are nervous about the economic impact of their rapidly rising currency, and frustrated by Europe's seeming inability to do anything about it..
Rumors that the bank might enter the market bubbled up this week after a senior official in the Japanese Finance Ministry, Hiroshi Watanabe, was quoted as saying that Japan and Europe could take "harmonized action" to temper the appreciation of their currencies against the dollar..
Central banks typically intervene by using their reserves to buy or sell currencies in massive amounts to influence their value. The pressure to mount such a rescue operation has grown as the euro rises to new heights against the dollar, denting Europe's exports to the United States..
If the European Central Bank is planning such an operation, however, it is not about to advertise it. Beyond saying that interventions are a useful weapon, the bank's president, Jean-Claude Trichet, declined to comment at a news conference Thursday on the possibility of such a move..
"Verbal discipline, at the present time, is really of the essence," said Trichet, who is not given to loose talk..
He also stuck to previous statements about the rise of the euro against the dollar, saying that rapid shifts in exchange rates were "not welcome." The euro reached another record high of $1.3385 on Thursday before falling back in New York trading..
Against this volatile backdrop, the European Central Bank left its key interest rate unchanged at 2 percent. Trichet noted that the governing council had considered raising rates, but opted to stand pat because the euro, and rising oil prices, are putting a crimp in Europe's growth..
The bank lowered its 2005 growth forecast for the 12-nation euro zone to 1.9 percent from 2.3 percent. It raised its inflation forecast to 2 percent from 1.8 percent, which Trichet said warranted vigilance..
Trichet's extreme caution, analysts say, underscores Europe's limited options. The rise of the euro is not a home-grown phenomenon, but a result of the dollar's decline. That trend is not likely to reverse as long as the Bush administration is ready to tolerate a weaker currency..
Recent statements by the U.S. Treasury secretary, John Snow, and the chairman of the Federal Reserve, Alan Greenspan, have been treated by speculators as a green light to bet against the dollar..
Intervening in the face of such market forces would be a highly risky undertaking, according to analysts. While Europe might find an ally in the Bank of Japan, it would almost certainly not have the support of the Federal Reserve. That would reduce the effectiveness of the action..
Mounting an intervention that failed could tarnish the credibility of the European Central Bank, which has won praise for its steady stewardship of the euro, but is still a fledgling institution..
"They are concerned about getting in front of this freight train, which is dollar appreciation, and not being run over by it," said Thomas Mayer, the chief European economist at Deutsche Bank..
The Fed and the European Central Bank intervened successfully in 2000 to stem the decline of the euro, which had fallen to 82 cents against the dollar. .
But by then, the currency was nearing the end of its downward cycle. Many analysts believe that the dollar could slide another 20 percent against the euro, given the ballooning current-account deficit in the United States..
"It's like pushing a car that's at the top of the hill, and letting it roll down the hill," Mayer said. "If the car is not at the top of the hill, and you give it a push, it may roll back on you.".
Trichet, a Frenchman who speaks fluent but formal English, has tried to talk down the euro - a practice known as verbal intervention - without much success. On several occasions, he described the exchange-rate swings as "brutal," which left traders scratching their heads..
Did he mean brutal, as in ruthless or cruel? Or was he using the word in its French context, in which it can also mean sudden or unexpected? Whatever the case, the euro kept rising, and Trichet retreated to the phrase "not welcome," which is less open to interpretation..
Even in his caution, however, Trichet has invited conflicting interpretations. Some currency traders said an intervention was now less likely, while others said it remained a possibility..
Much will depend on how far the euro goes. "$1.35, here we come," said Michael Schubert, a currency analyst at Commerzbank. "But at $1.40, it becomes a political hot potato, and the Europeans, the Americans, and the Asians have to huddle and come up with a solution.

FRANKFURT The strongest verbal intervention to date from euro-zone finance ministers and central bankers failed to prevent the 12-nation currency from rising to yet another high against the dollar on Tuesday..
The dollar rallied briefly against the euro after European finance officials, with Jean-Claude Trichet, president of the European Central Bank, in attendance, released a statement on Monday criticizing the United States for not doing more to reduce its current-account deficit..
But the dollar slumped again soon after, highlighting the inability of euro-zone leaders to talk the euro lower while jousting publicly with the United States over exchange rates, and nourishing skepticism over whether the ECB has a coherent strategy for checking the euro's rise, currency strategists and economists said..
"Talk is a free, cheap option right now, but over time it erodes credibility if nothing happens," said Julian Callow, chief European economist with Barclays Capital in London. "Words have their limits.".
On Nov. 4, Trichet opened the latest round of efforts to influence the currency verbally when he called the euro's appreciation to $1.2890 "brutal and unwelcome." The dollar has fallen 4 percent since then, Callow noted..
Following a quick bounce for the dollar as trading began in Europe, the euro rose to a record $1.3470 on Tuesday before giving up some of its gains later in the day..
In Brussels on Monday night, finance ministers from the 12 countries that use the euro issued a statement that criticized "excessive volatility and disorderly movements" in currency values as "undesirable for economic growth." Trichet, who attends the meetings but usually does not appear publicly at them, stood by the ministers at the subsequent news conference, reinforcing the message without explicitly signing onto it..
The ministers took a direct shot at the United States for its current-account deficit, which is fed by a large government budget shortfall and rising imports, calling for a stepped-up effort to close the gap..
"All major countries and economic areas must play their part more actively in reducing global imbalances by putting in place the appropriate economic policies," they said..
U.S. officials including John Snow, the Treasury secretary, and Alan Greenspan, chairman of the Federal Reserve, have fed impressions over the past month that the United States welcomes the dollar's decline, which cheapens American exports and, theoretically, could help reduce the deficit. Euro zone nations, by contrast, fear that the strong euro could choke a nascent economic recovery..
In September 2000, the ECB intervened directly in currency markets in concert with the United States and Japan. But now, with the Americans content with a weaker dollar, and Japan eager to keep the yen from rising against the dollar, Europeans are being forced to sort the problem out on their own. .
Paul de Grauwe, an economics professor with the University of Leuven in Belgium, said the absence of viable options for euro-zone policy makers probably made criticism of the United States, an easy target because of its fiscal profligacy, irresistible..
"This statement was a reflection of Europe's powerlessness," de Grauwe said. "It's always easy to rally Europe in opposition to the United States.".
The message on Monday also failed to address apparent contradictions in the ECB's strategy that have led traders to keeping driving the dollar down, economists said. While the central bank professes concern about the euro, it seems unwilling to back its words with concrete measures, they said..
Trichet said last Thursday at the bank's regular monthly meeting that the ECB had discussed raising interest rates to curb inflationary tendencies, a move that would also increase the value of euro-denominated assets and drive the currency still higher. He added that the ECB did not consider reducing borrowing costs, a move that would presumably weaken the euro..
"If the ECB stays focused on inflation, anything they say about the high euro is that much less credible," said Stephen Jen, a currency strategist with Morgan Stanley in London..
Axel Weber, president of the Bundesbank and a member of the ECB's governing council, on Tuesday reinforced the impression that the central bank does not fear the strong euro will trim growth by slowing exports. Weber said the euro's rise was "not welcome," but predicted that it "won't have a sustained effect.".
"There is a certain threat, of course, but the competitiveness of German industry remains," Weber said..
However, asked about the possibility of having the ECB sell euros to curb the currency's rise, Weber said "interventions are a tool that are always available to central banks," according to The Associated Press. .
A sustained rise in the euro to $1.35 or $1.40 would force the bank to intervene directly in currency markets, many strategists believe. Now that Trichet has clearly aligned himself with worries about the euro's strength, backing up words with deeds is crucial to the ECB's ability to convince financial markets that it has a firm hand on the rudder..
"We're very close to the point where the ECB has to do something to preserve its credibility," said Rob Carnell, an economist with ING Financial Markets in London..

Commentary: "A Global Accounting: An Occasional Column"
from the December 09, 2004 edition

Why the world frets over the dollar's fall

By David R. Francis

During a dollar crisis in the 1970s, Treasury Secretary John Connally told his European counterparts, "The dollar's our currency; but it's your problem." There's still a lot of truth in that today. The reaction abroad to the current drop in the greenback's value differs sharply from that in the United States. Japanese and European officials reportedly have already talked behind the scenes about intervening in foreign-exchange markets to prop up the dollar.
But last week's leak to the press may not materialize in real action unless the dollar falls rapidly - or reaches really low levels. So American consumers will shell out more for foreign cars and toys and trips abroad.

Since a recent peak in February 2002, the dollar has fallen an average of about 15 percent against the currencies of the key trading partners of the US. That has prompted loud complaints in Europe, where businesses worry that their exports, priced in more expensive euros, could become uncompetitive. Economic growth could stall.

But here in the US, Treasury Secretary John Snow appears blasé. The administration has given no hint it will use its $82 billion stash of foreign-currency assets to support the price of dollars by buying them on foreign-exchange markets. "Nobody cares in Washington," says consulting economist David Hale in Chicago.

Three decades ago, some foreigners interpreted the dollar's fall as symbolic of a decline in US economic and political status. Today with the invasion of Iraq, it's sometimes seen as signaling an overextension of America's resources abroad. But "it's all nonsense," says David DeRosa, a Yale University finance professor. "It's simply an adjustment in price" of the dollar.

While Mr. Hale sees a "small" loss of US prestige in the dollar's decline, he's more worried about the loss of confidence in the dollar continuing and getting worse.

Confidence is important. Over the past 10 years, America has been the place to invest. Foreigners poured $6 trillion into US financial markets. That's $1 trillion more than the growth in the US gross domestic product in that decade. Private investors hoped for a better return than they could get in Europe, with a lackadaisical economy, or in Japan, with a flat if not a recessionary economy. That investment flood was a key factor in the dollar's strength - until the last year or so. But with soaring budget deficits and a $620 billion deficit in the US current account (the trade balance plus some investment flows) this year, private investors have become more cautious about sending money into the US.

That has put more pressure on foreign central bankers - the Alan Greenspans of the rest of the world - to step up to the plate. Will they buy more dollars so their own currencies don't rise too much? Or will they sell their greenbacks because their value is falling?

The response, so far, illustrates how topsy-turvy the world of central banking can be.

Some usual US partners have decided to trim dollar losses. Canada, Australia, and New Zealand have already reduced the dollar share of their foreign-exchange reserves to less than 50 percent, compared to a global average of 66 percent, says Hale. "Our traditional allies have abandoned the US dollar."

Meanwhile, our chief Asian economic competitors - Japan and China - have stepped in over the past two to three years to prevent their own currencies from rising.

By now, Japan has amassed $817 billion worth of foreign currency, mostly dollars. But it too has thrown in the towel - at least for now. It stopped supporting the dollar this past spring, letting the yen rise.

China has the second largest pool of international reserves, some $600 billion. It is still pegging its own currency, the yuan, to the dollar at a fixed rate, and thus is accumulating more dollar assets.

Major foreign nations won't find it so easy to bail out of dollars as smaller countries do. If China's central bank, for instance, decides to use some of its surplus dollars to buy euros for its reserves, it further depresses the dollar - and the value of its dollar reserves. Further, no other capital market is so huge and liquid as that of the US. China or Japan could have trouble selling large amounts of dollar assets. The euro market can accommodate billions of dollars in a transaction, but not tens of billions, notes Richard Cooper, a Harvard economist. And Japan's financial market is relatively small and offers even lower yields than the US market.

In any case, it's not clear that central bankers worry much if their dollar assets are devalued. Prior to the creation of the euro in 1999, a common currency for 12 European nations, the Austrian central bank simply revalued its gold holdings upward to cover a capital loss, in its books, on its dollar-denominated assets.

But if the pressure on the dollar builds into a rout and thereby pushes up US interest rates, American benign neglect may fade. The Federal Reserve, with the backing of Treasury, could then invite other nations to help save the dollar. There will be "willing cooperators" around the world, says Professor Cooper.

Walter: you started this thread about 11 days ago - have you noticed any trends in the Euro/USD exchange rates in that time?

Actually, I restarted it :wink:

Seems - I don't know, if this will become a trend - that the EURO goes down since yesterday (which means, it's still higher than a week ago).

Aaaah, I see. What's the latest Tourist Rate?

Dec 28, 8:30 AM EST

Dollar Slips to New Low Against Euro

BERLIN (AP) -- The dollar slid to a new all-time low Tuesday against the euro, which rose to $1.3643 in thin post-holiday trading.

The dollar's new low came in afternoon European trading, with the euro creeping just past its previous high - set Monday - of $1.3640.


Down and down she goes where she stops nobody knows.

What is the dollar worth today?

€ in $ 1,3129

(Four more cd's ordered :wink: )

It's an ill wind.....

source

BBC: Dollar falls to record euro low

and oil hit $101 plus today - canadian dollar now trades at U.S. 1.0193 - good for a trip to the U.S. but bad for canadian exporters to the U.S.

Well, higher oil prices don't hit is so much as they did years ago. Now. :wink:

walter wrot :



oh yea ???
you really want to make yourself unpopular with americans and canadians , don't you ?
your efforts are appreciated , i'm sure ! :wink: