Weak US data worries currency converters
The dollar was back near record lows against the euro after more weak data emerged from the US, this time showing that consumer confidence continues to wane.
The latest piece of data adds to an already strong case for a US rate cut this afternoon. A quarter-point reduction to 4.50 % is fully priced in but expectations of a larger 50 basis point cut is growing steadily.
At the last meeting, in August, US rate setters cut rates by half a point to 4.75 %. Still, most analysts believe the larger cut tooday is very unlikely given the seeming calm in credit markets and the spike up in oil prices above 90 usd a barrel.
Data out this yesterday showed consumer confidence falling to a two-year low in October as consumers became increasingly worried about the job market and deteriorating business conditions.
The New York-based Conference Board said its Consumer Confidence Index fell to 95.6 from 99.5 in September. That was its lowest level since the post-Hurricane-Katrina reading of 85.2 in October of 2005.
It appears that while the Fed's September rate cut helped to stabilise confidence, it was unable to keep it from deteriorating further following the August liquidity crisis.
Before the rate verdict, US third-quarter GDP data is due and a 3.0 % annualised rise is expected. The dollar may well enjoy a relief rally if the data comes in as expected and US rate setters deliver a quarter point cut to 4.50 %. From then on, however, the dollar's woes may well resume.
Elsewhere, the pound was in the ascendancy against the dollar, rising to a new 26-year high following further hawkish comments from a key swing voter on the Bank of England's rate-setting body.
Earlier, Sterling rose to its new 26-year high of 2.0693 usd. Kate Barker, one of nine members of the Monetary Policy Committee, said there is little evidence that there has been a major change in peoples' attitudes following the recent financial turbulence.
Speaking during a visit to Guernsey, Barker questioned whether things have changed enough to warrant a fall in borrowing costs, according to an article on The Guernsey Press and Star website.
The Swedish krona rose after the Riksbank raised its key repo rate by 25 basis points to 4.00 % as expected and reiterated that rates will need to rise again during the first half of next year.
Explaining the move, the central bank cited strong growth and rising employment levels, as well as "rapid" increases in lending and house prices, which are leading to a rise in inflation expectations.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
The latest piece of data adds to an already strong case for a US rate cut this afternoon. A quarter-point reduction to 4.50 % is fully priced in but expectations of a larger 50 basis point cut is growing steadily.
At the last meeting, in August, US rate setters cut rates by half a point to 4.75 %. Still, most analysts believe the larger cut tooday is very unlikely given the seeming calm in credit markets and the spike up in oil prices above 90 usd a barrel.
Data out this yesterday showed consumer confidence falling to a two-year low in October as consumers became increasingly worried about the job market and deteriorating business conditions.
The New York-based Conference Board said its Consumer Confidence Index fell to 95.6 from 99.5 in September. That was its lowest level since the post-Hurricane-Katrina reading of 85.2 in October of 2005.
It appears that while the Fed's September rate cut helped to stabilise confidence, it was unable to keep it from deteriorating further following the August liquidity crisis.
Before the rate verdict, US third-quarter GDP data is due and a 3.0 % annualised rise is expected. The dollar may well enjoy a relief rally if the data comes in as expected and US rate setters deliver a quarter point cut to 4.50 %. From then on, however, the dollar's woes may well resume.
Elsewhere, the pound was in the ascendancy against the dollar, rising to a new 26-year high following further hawkish comments from a key swing voter on the Bank of England's rate-setting body.
Earlier, Sterling rose to its new 26-year high of 2.0693 usd. Kate Barker, one of nine members of the Monetary Policy Committee, said there is little evidence that there has been a major change in peoples' attitudes following the recent financial turbulence.
Speaking during a visit to Guernsey, Barker questioned whether things have changed enough to warrant a fall in borrowing costs, according to an article on The Guernsey Press and Star website.
The Swedish krona rose after the Riksbank raised its key repo rate by 25 basis points to 4.00 % as expected and reiterated that rates will need to rise again during the first half of next year.
Explaining the move, the central bank cited strong growth and rising employment levels, as well as "rapid" increases in lending and house prices, which are leading to a rise in inflation expectations.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
posted by Wise Money @ 5:53 PM
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