The euro slid to a six-month low against the dollar on Tuesday amid concerns over a weaker eurozone, while the US currency fell versus the yen on fresh worries about the health of US mortgage giants, dealers said.
The European single currency dropped to 1.4631 dollars — the lowest level since February. In later London trading, the euro stood at 1.4671 dollars compared with 1.4696 in New York late on Monday.
Against the Japanese currency, the dollar slipped to 109.90 yen from 110.09.
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German investor confidence improved slightly in August, a key economic indicator suggested on Tuesday, thanks to the recent fall in the price of oil and a weakening of the euro.
The ZEW research institute said its index of economic sentiment stood at minus 55.5 points, up 8.4 points from July when the survey hit its lowest level since its creation in December 1991.
“The pick-up in the German ZEW index in August shows that investors’ expectations for the economy have improved, but this is little consolation given the still low level of the index,” said Capital Economics analyst Jennifer McKeown.
August 20th, 2008 at 2:53 am
Wow, six month low….ohhhhhhh, when the first euros came out I was in Holland and I paid $.86 for it…now $1.46 a low….ohhhhhhhhhh, I should feel so lucky….
August 20th, 2008 at 5:40 pm
Inflation is at an all time high in the US
http://edition.cnn.com/2008/US.....rss_latest
The prices of goods and services are increasing from the price last year. Once inflation happenes (which is to be avoided at all costs in the eyes of the federal reserve) the way to deal with this is to raise interest rates.
This causes people in debt (i.e. almost everyone) to spend less. Spending less reduces demand and supply goes up meaning prices will then come down.
If interest rates go up (or are though by foreign exchange dealers to go up which is the case here) the value of the dollar increases because more people will want to hold dollars for the return.
This is why the dollar is becoming more valuable because of this inflation news.
So, in effect, expect higher interest rates