The story behind the Dollar’s decline contains two threads:
narrowing interest rate differentials and growing concerns surrounding the US
economy. With most of the
industrialized world’s Central banks not scheduled to meet again for a few
weeks, the interest rate story can temporarily be placed on hold in favor of
the economic story, which is becoming uglier every day. The centerpiece remains the US housing
market, which many analysts believe will soon slide into a major rut. There is a great deal of uncertainty over
whether homes can retain their value and if borrowers will be able to pay off
their mortgages. Rising rates have
squeezed many low-income, high-risk borrowers, causing a crisis of growing
proportions in the market for mortgage-backed securities, which is at risk for
spreading to other areas of securities markets. Forbes reports:
“Credit concerns, rating reviews, yields tumbling; it has
been one-way traffic against the dollar in recent minutes and euro/dollar has
rallied up a fresh all-time high.”
Read More: Dollar slump sends euro
to record high
Original post by Jimmy Atkinson and software by Elliott Back
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