The sudden fall in prices or the dollar in the continuity of this week. The present fundamental factors are not conducive to such a weak currency, instead of the expected interest rate cuts in the United States initiatives is even worse. In support of the weak dollar, expected capital will last into the commodity market, oil, gold and other commodities continued to rise.
The Wall Street Journal pointed out that the United States economy revealed signs of recession and financial crisis, these factors have caused the dollar to heavy pressure, while the dollar last week fell more psychological levels are exacerbated by the popularity of the bearish market.
According to http://finance., EUR/USD has exceeded $ gate and touch 1.5500 historical high. Dollar-Switzerland francs in last Friday's first fell below parity. The US dollar against the yen also declining, fell 100.00 yen, invasive 12 years minimum.
New York City on Friday after the foreign exchange markets, the euro/dollar fell from morning up high, reported $ 1.5625, but still higher than the last Thursday of $ 1.5613 weipan; Euro/yen, La 156.41 yen, below, on Thursday Weipan 157.20 yen. At the same time, the dollar/yen, La 100.10 yen, below, on Thursday Weipan 100.78 Yen; dollar 1.0049 Switzerland francs less than last Thursday Weipan 1.0111 Switzerland francs; in addition, the GBP/USD, USD, below the upper 2.0293 Thursday Weipan 2.0301 dollars.
Gloomy prospects for the dollar. If the Federal Reserve (Fed) significant interest rate cuts on Tuesday again, relative to the higher interest rates in the national currency, the dollar's weakness will further increase.
CMC Markets in New York, Chief Forex strategist Ashraf Laidi said the Fed rate cut this week if you will have a very high against the dollar negative impact, this is because the dollar is already close to the crisis point, moreover along with decreased and speed increases, the currency is the edge of the slide to runaway. TD Securities, Toronto, Chief Forex strategist Shaun Osborne also agree Laidi, indicates that the decline in the dollar is currently very difficult to check the car.
Current market expected Fed rate cut on Tuesday 75 basis points, but if you cut interest rates by 50 basis points only, then the dollar may also be a rebound of hope, but in view of the Friday weaker than expected inflation in the United States in February, interest rate 50 basis points of possibility does not seem to be too great. But if there is no clear indication that this round of cuts in activity has a close, even a mild rebound in its US dollar rally is also unsustainable. Osborne said, only the Fed made it clear that will end this round of cuts cycle, the US dollar from the current weak state of rebound, but current Fed seems to have no such intention.
CMC Markets of Laidi said unless there are more and more United States and other State officials to express concerns about the US dollar, otherwise the dollar will continue to be the current downturn trend. But so far, officials of the US dollar express concern and rare. Including President Bush, United States officials have expressed support for a strong dollar policy, but also Japan and European officials are respectively against the yen and the euro strong pretended not very welcome.
However, the major central banks Laidi believe may increase soon an oral intervention intensity, expressed in the foreign exchange market volatility is not welcoming attitude, but also possible covert intervention measures, i.e. banks follow the Fed and other central banks of commands massive dollars.
But he said, to tangible and non-temporary slowdown in the US dollar decline, the only way is to declare the Joint Central Bank intervention, but this possibility is still low, because policymakers aware of the current base surface is not conducive to the dollar, but in many respects, the dollar's decline is reasonable.
As the dollar increase in commodity markets will continue to render the bull, the influx of funds would make such as oil, gold and other commodities continued to rally. Last week the New York Mercantile crude oil futures price hit a record high, reached US $ 111 per barrel, gold price is breaking the $ 1000/oz.
Investment guru Jim Rogers also noted that, due to supply and demand imbalances between, future commodity markets will take ten years. He said that the relationship based on supply imbalance in the gold price will exceed 2000 dollars an ounce, oil prices will also be higher. "It is estimated that by the year 2018 and 2019, may people all over the world in the ' find ' commodities, then the price will go up very badly. ”
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