Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

US Dollar tumbles against most major currencies falling to historic lows against the British Pound and the Euro

Currencies / Strategic News Dec 01, 2006 - 12:15 AM GMT

By: Nadeem_Walayat

Currencies

The dollar hits new lows against several major currencies, plunging to 1.96 Dollars to the British Pound, 1.33 Dollars to the European Euro, and to 115.5 Japanese Yen to the Dollar. The recent downtrend has been developing since early October, since when US interest rate expectations of further rises have shifted to a possibility of cuts in the new year in the face of a slowing economy on the back of a slump in the US housing market.

The downtrend was recently further reinforced by the outcome of the US election and rumors that the Chinease were planning on significantly diversifying their reserves away from the dollar, including comments made by the Governor of the Chinease Central bank as implying as such.

British Pound (GBP/$) Euro (EUR/$)
   
Japanese Yen ($/JPY) Canadian Dollar ($/Can$)
   

Technically the charts show a breakout to the downside of the dollar against most currencies. The dollar is clearly targeting $2 against the British Pound, having flirted with the mid 1.95's for approaching 18 months now, if that time is taken as the formation for a base for the next down leg in the dollar then that could signify a much more powerful decline in the dollar than most market commentators are estimating at this point in time, The $ could target a move against the Pound to $2.10. Against the Yen $1.10 seems likely, with the Euro likely to rally to Euro/$ 1.40. The strongest beneficiary will probably be the Pound, given that the housing market in the UK is still strong, and economic activity buoyant for the time being at least.

There is also the risk that the dollar may even collapse, if panic hits foreign holders of trillions of dollars of US assets, undoubtedly the worlds central banks will seek to avert a collapse and look to engineer a more orderly decline in the dollar. The Federal reserve may now be forced to keep interest rates on hold as a weakening dollar will feed through to already stubbornly high inflation figures, that continue to trend higher despite the slowing economy. Thus the Fed is unlikely to cut interest rates and should the dollar threaten a collapse, may even be forced to raise interest rates. This spells the specter of stagflation as a consequence of recession and a declining dollar during 2007 keeping inflation bubbling above the Feds target range of 1 to 2 %.

Related Articles

Nov 27, 2006
Japanese economy continues to grow as the dollar weakens
Nov 24, 2006
The carry trade could end as Japan looks to raise interest rates on the back of an strengthening economy
Nov 21, 2006
US economy heads for a hard landing in 2007
Nov 10, 2006
China's plan to diversify $1trillion reserves sends the dollar plunging
Nov 8, 2006
China's currency reserves pass $1 trillion and likely to double to $2 trillion by 2010
Nov 03, 2006
How does the US Dollar Defy the Law of Gravity ?
Oct 29, 2006
The US Dollar Bear Market - Is the downtrend about to resume ?
Oct 15, 2006
US Debt Mountain - How can it be serviced ?

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in