Daily Revolt

November 21, 2007

Dollar Sets a New Record Low

We need worry:
The dollar sank to a new low against the euro Wednesday on pessimism about the American economy and speculation Washington will soon cut interest rates again.

The euro spiked to $1.4855 before retreating slightly to $1.4787 in morning European trading. It broke the $1.48 mark for the first time on Tuesday, settling at $1.4815 late in New York.

The dollar also hit a two-year low against the Japanese yen, falling to purchase as little as 108.81 yen before rising slightly to 109.19 yen -- compared with 109.69 yen in New York on Tuesday. It was last lower when it purchased 108.76 yen on Sept. 5, 2005.

And it has to do with oil prices. At what point do start waking up to this crisis. Yes, crisis:
Crude oil prices rose above a record $99 per barrel Wednesday as worries about inadequate winter supplies in the Northern Hemisphere and news of refinery problems stoked bullish sentiment.

The declining U.S. dollar and speculation that the U.S. Federal Reserve will again cut interest rates also boosted prices. Some investors put their money into oil contracts, betting that gains in their price will offset dollar weakness.

Lower dollar and higher oil prices are having a negative impact on the stock market. That is why we really need to worry:
Asian markets tumbled Wednesday and shares fell across Europe as crude oil flirted with $100 per barrel and the U.S. Federal Reserve pointed to slowing growth next year.

[...]The Nikkei 225 stock index sank 373.86 points, or 2.46 percent, to close at 14,837.66 points — its lowest point since July 24, 2006. Since the start of November, the index has dropped 13.1 percent.

[...]n Asia and Europe, investors remained bearish over the murky outlook for the U.S. economy, an important export market, amid problems in the housing and banking industries. Wild swings Tuesday in the Dow Jones industrial average — which ultimately closed flat — fanned that anxiety.

"That seems to reflect unsettled prospects for the market," said Masayoshi Okamoto, general manager at Jujiya Securities in Tokyo.

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